Citigroup strategists insist that the US Treasury will cut the scale of long-term treasury bond issuance in next month's quarterly refinancing announcement. The bank said that questions in the questionnaire distributed to Tier 1 traders last Friday showed that Ministry of Finance officials are considering such measures. The Ministry of Finance solicits opinions from traders on long-term repurchase operations and structural demand trends to evaluate “future adjustments to the scale of auctions of nominal interest-bearing treasury bonds and variable interest rate notes.” “We think these issues support our view that the Treasury will reduce the auction size of 20-year and 30-year treasury bonds by $3 billion each on November 4,” Alejandra Vazquez Plata and Jason Williams wrote in a report to clients. “The sharp sell-off in long-term yields since the last refinancing announcement, and the relatively weak performance in previous rounds of long-term repurchase operations after the upper limit was announced, will prompt the Ministry of Finance to shift long-term issuance to short-term treasury bonds.”

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