SIFMA Issues Quarterly Government Securities Issuance And Rates Forecas

The Securities Industry and Financial Markets Association (SIFMA) today issued its quarterly government securities issuance and rates forecast for the fourth quarter of 2010.

The full report is available at the following link: http://www.sifma.org/uploadedFiles/Research/ResearchReports/2010/Outlook_USGovernmentForecast_2010Q4_SIFMA.pdf

Highlights of the forecast include:

· SIFMA forecasts total net Treasury bill, note and bond issuance to be $387.0 billion in the fourth quarter of 2010, slightly under the net $395.8 billion issued ($399.0 billion previously forecast in SIFMA’s 3Q’10 issuance survey) in the third quarter (as a reminder, actuals include cash management balances). The median forecast for net new issuance of Treasury coupon securities (notes and bonds) is $364 billion in the fourth quarter, 6.6 percent below 3Q’10’s net issuance of $389.9 billion but in-line with 4Q’09’s $362.5 billion. In addition, survey respondents expect Treasury to finish the year with $270 billion in cash (accounting for the $200 billion SFP limit), which is directly in-line with the $270 billion Treasury estimated in August for both end-September and end-December 2010 cash balances.

· Survey participants forecast total gross coupon issuance by the four largest Federal agencies to be $334.5 billion in the fourth quarter, compared to $250.7 billion in 3Q’10, a 33.4 percent increase.

· Survey respondents expect a net bill issuance of $23 billion in the fourth quarter, compared to a net issuance of $5.9 billion in 3Q’10 and a significant net redemption of $203 billion in 4Q’09.

· Survey respondents forecast Treasury will issue $19.5 billion of Treasury Inflation-Protected Securities (TIPS) in 4Q’10, 33 percent below the $29.3 billion issued in 3Q’10.