Treasury, Citing Progress Against Budget Deficit
Wednesday, May 2nd 2007, 8:32 am
By: News On 6
WASHINGTON (AP) _ With budget deficits improving, the government said Wednesday it is discontinuing sales of three-year Treasury notes.
The Treasury Department said the last auction of three-year notes will occur next week as part of the regular series of quarterly debt auctions used to help finance the $8.8 trillion federal government debt.
The government's borrowing needs peaked in the 2004 budget year, when the federal deficit hit an all-time high in dollar terms of $413 billion. Since that time, the deficit has declined for three straight years and is projected to drop further this year.
Smaller budget deficits mean less need for the Treasury Department to sell bills, notes and bonds to the public. Treasury said it had decided to discontinue the three-year note in order to keep the amounts of the other securities at levels that would be popular with financial markets.
The announcement was made as part of the government's regular quarterly borrowing process, known as a refunding. The Treasury said it would sell $32 billion in securities next week in the following denominations:
_ A final 3-year note totaling $14 billion to be auctioned on Monday, May 7.
_ A 10-year note totaling $13 billion to be auctioned on Tuesday, May 8
_ A 30-year bond totaling $5 billion to be auctioned on Thursday, May 10.
Financial markets have speculated about whether the lower budget deficits will cause Treasury to consider halting sales of other debt securities. Treasury officials on Wednesday refused to speculate about that possibility.
``Treasury will continue to assess the fiscal and economic outlook and to review the size, frequency and issuance of securities,'' Anthony Ryan, Treasury's assistant secretary for financial markets said in a statement.
Analysts believe that this year's budget deficit could drop as low as $200 billion, compared to a deficit in the 2006 budget year, which ended on Sept. 30, of $247.7 billion. That figure represented a four-year low for the deficit.