Mnuchin to Wield Power Over Yield Curve With Fresh Supply Boost
- Dealers see auction increases at Aug. 1 refunding announcement
- Some expect Treasury to extend bigger sales to 5-year notes
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As Treasury Secretary Steven Mnuchin prepares to unveil plans to finance the surging U.S. budget deficit, his choices are seen as key to the fate of the yield curve, which is drawing scrutiny because of its march toward inversion.
The nation’s debt managers are set to release a funding program for the next three months on Aug. 1, and bond dealers say it’s a given that coupon-bearing issuance will rise for the third straight quarter. Some project Treasury will extend the sector it leans on to finance budget shortfalls out to the five-year maturity. Either way, the announcement could add fuel to the curve-flattening trend, which has alarmed officials who see it as signaling a darkening economic outlook.