US Treasury to trim auction sizes of 2, 3-yr notes over next qtr

A statue of the first secretary of the Treasury, Alexander Hamilton, stands in front of the U.S. Treasury Department building in Washington.
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The United States will gradually cut back the size of two- and three-year note auctions over the next three months to reflect a better budget outlook, the U.S. Treasury said on Wednesday.

In a statement, Treasury Deputy Assistant Secretary for Federal Finance James Clark said the reductions would begin with the November three-year note auction announced on Wednesday.

"The magnitude and duration of the offering-size reductions will depend on the pace and extent of the fiscal improvement," he said.

A Treasury official said the reductions would probably be in line with recent cuts, of about $1 billion per month in each security.

"I expect it's going to follow much the same pattern as recent coupon reductions that we have had, so that's a billion per month for the next three months," he said.

That would equate to an annualized $66 billion reduction in total issuance if the reductions stopped after three months, the official said.