The US Treasury said on Monday it expects to borrow $739 billion in the third quarter, $68 billion more than it projected in May, as lower projected cash flows were only partly offset by a higher-than-assumed starting cash balance.

Treasury Borrowing Estimate

Stripping out the benefit of that larger starting cushion, the increase in borrowing needs is $87 billion above the May estimate. The department’s quarterly refunding statement assumes a cash balance of $950 billion at the end of September.

For the fourth quarter, Treasury projected borrowing of $628 billion, based on a year-end cash balance of $850 billion. The department also said it borrowed $190 billion in the second quarter, ending June with a cash balance of $919 billion.

Treasury will detail its refunding plans, including auction sizes, on Wednesday. Traders will be watching closely for any signal that the department intends to lean more heavily on longer-dated debt in coming quarters.

Against that backdrop, analysts said Treasury has added incentive to stick to a predictable issuance path and avoid any surprises that could further rattle a jittery bond market.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.