From NASDAQ:

The U.S. Treasury is expected to confirm further increases in government bond supply in its first quarterly refunding announcement of 2024 on Jan. 31. Demand dropped off sharply at the beginning of the final quarter in 2023 as top foreign buyers focused their energies on their own debt. As a result, yields began to move higher, peaking in mid-October at above 5%. Subsequently, as markets became aware that the Federal Reserve’s rate hike cycle had peaked, bond yields fell sharply. Demand for Treasuries began to return as hopes improved that an economic slowdown wouldn’t deteriorate into recession.

The shift in Treasury demand is fundamentally rooted in improved macro confidence and growing Fed rate cut expectations. January Treasury refunding announcement is not likely to rock this boat. Treasury refunding is an important part of government financing. During the last refunding, increases of $3 billion and $2 billion per month were announced across different tenures, with some sizes remaining unchanged. Investors can track bond price movements through exchange-traded funds (ETFs). Treasury supply will remain a powerful consideration in the Treasury market for some time to come, as investors must also take into account twin deficits. US deficits are still large and growing, which means that UST supply will remain heavy.



Read more: Treasury Glut: Can Investor Demand For US Bonds Keep Pace With Supply Increases?