The quarterly refunding is aimed at raising new cash of $17.2 billion from private investors.

It also launched its buyback program, with the first scheduled on May 29. The Treasury's last regular buyback program began in the early 2000s and ended in April 2002.

In a statement, the Treasury said it would sell $58 billion in U.S. three-year notes, $42 billion in 10-year notes, and $25 billion in 30-year bonds next week.

The decision to keep auction sizes unchanged for the most part was based on current projected borrowing needs. Since August, the Treasury has noted that it has significantly raised issuance sizes for nominal coupon and floating rate note securities.

"The auction sizes were unchanged as expected, but the key here is that this a pause in increases not a reversal," said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities in New York.

"The Treasury very clearly said they don't anticipate increasing auction sizes at least for the next several quarters. But they're still talking about an increase, not a decrease. Our view is that by mid-2025, Treasury may have to start increasing auction sizes again."

The Treasury said it plans to address seasonal or unexpected changes in borrowing needs over the next quarter through changes in regular bill auction sizes and cash management bills.

In terms of Treasury Inflation-Protected Securities (TIPS), the Treasury said it intends to keep "incremental increases" to their auction sizes to maintain a stable share of TIPS as a percentage of total marketable debt outstanding.

In the May to July quarter, the Treasury plans to keep the 10-year TIPS reopening auction size at $16 billion for May, increase the June 5-year TIPS reopening size by $1 billion to $21 billion, and raise the 10-year TIPS new issue size by $1 billion to $19 billion for July.

As for Treasury bills, the Treasury said it expects to increase the four-, six- and eight-week bill auction sizes in the coming days to ensure sufficient liquidity to meet one-week cash needs around the end of May.

Ahead of the non-withheld and corporate tax filing date on June 15, the Treasury expects to undertake modest reductions to short-dated bill auction sizes during early to mid-June. For July, it anticipates returning short-dated bill auction sizes to levels at or near the highs from February and March.

'LIQUIDITY SUPPORT' BUYBACKS

Under the buyback program, the Treasury said it plans to hold weekly "liquidity support" buybacks of up to $2 billion per operation in nominal coupon securities, and up to $500 million per operation in TIPS.

Buybacks are similar to other government outlays, said Josh Frost, the Treasury's assistant secretary for Financial Markets, in a press briefing after the refunding announcement. "Unlike other outlays, these ... actually extinguish marketable debt."

At an International Swaps and Derivatives Association conference in September, Frost had said debt buybacks can help improve liquidity in the bond market by providing a regular opportunity for market participants to sell back to Treasury off-the-run securities, which are older and less liquid, across the yield curve.

No cash management buybacks have been planned for the May to July 2024 quarter. Those buybacks could begin later in 2024 depending on fiscal flows and market conditions.

The Treasury said it intends to announce a tentative buyback schedule at each quarterly refunding.

On a proposal from the Treasury Borrowing Advisory Committee (TBAC) to find ways to reduce borrowing costs and expand the investor base, Frost said this was a periodic request by the Treasury to the group.

TBAC's proposal "is best viewed through the lens of exploratory in nature, without recommendations coming out of it. There may be future work in the future, but at this point it was largely exploratory," he said.

The Treasury also announced plans to change the regular six-week cash management bills into a benchmark bill, as part of regular weekly bill issuance schedule going forward, based on the recommendation of primary dealers and TBAC.