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US Treasury Leaves Nominal Coupon Auction Sizes Unchanged

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The US Treasury intends to maintain its nominal coupon auction sizes, its quarterly refunding announcement Wednesday showed.

"Treasury believes its current auction sizes leave it well positioned to address potential changes to the fiscal outlook and to the size and composition of the SOMA portfolio," the Treasury said in its statement.

"Based on current projected borrowing needs, Treasury anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters."

Next week, the Treasury will sell $58 billion of 3-year notes, $42 billion of 10-year notes, and $25 billion of 30-year bonds.

Treasury also said that it plans to maintain the current sizes of its TIPS auctions over the coming quarter.

Any unexpected borrowing needs will be met by changes in regular bill or cash management bill sizes, it said.

Treasury expects to increase the auction sizes of its shorter-dated benchmark bills over the coming weeks before reducing them in June based on projections of incoming tax receipts, before increasing them again in July.

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UBS Previews This Week's Labor Market Report in Canada

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Canada's Government Bond Auction Sizes May Remain High in Next Months, Says National Bank

Canadian gross treasury bill issuance is rising to $30 billion this week, or $2 billion higher, said National Bank of Canada.Of that, the Bank of Canada will buy $300 million, or 1% of the tender. Including cash management bills, $31 billion will mature Tuesday, leaving no net new supply for investors, noted the bank. By the end of week, the bill stock will stand at $285 billion.The government's Spring Economic Update ushered in a downward revision to the bill stock target. By the endof March 2027, outstanding bills are now expected to settle at $268 billion, stated National Bank. Indicatively, this could be accomplished with average auction sizes of $22 billion.In reality, auction sizes will differ and they may remain high in the coming months (in part to fund bond maturitiesin June, August and September) before easing in the fall, pointed out the bank.BoC rate hike expectations rebounded since last auction as oil prices rose and markets interpreted the late April decision hawkishly. Indeed, investors keyed on Macklem's quote in the press conference where he threatened "consecutive" rate hikes if oil prices continue to increase, remain elevated and becomes ongoing generalized inflation.To be sure, this is a risk, added the bank. However, it's clear that this is far from the BoC's base case. As part of the decision, they also provided updated economic and inflation projections. Notably, the central bank revised down its projection for core inflation in 2026.So, while the BoC acknowledges that overall inflation is set to rise with higher gasoline prices, the central bank sees effectively no "broadening" into non-energy prices. If the conflict doesn't escalate further, the bank should see oil prices gradually moderate, which should help ease hike expectations, added National Bank.Ultimately, the bank continues to expect the BoC to remain sidelined until 2027 though it's clear the risks are skewed towards earlier tightening.

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