US Cuts Quarterly Borrowing Target to $776 Billion, Still Record

The US Treasury reduced its estimate for federal borrowing for the current quarter thanks to stronger-than-expected revenues, offering some relief for investors concerned about the rapidly widening fiscal deficit.

The Treasury Department cut its net borrowing estimate for the October-through-December quarter to $776 billion, against the $852 billion for the period predicted in late July. Debt managers kept their estimate for the Treasury’s cash balance for the end of December at $750 billion.

The new borrowing amount is somewhat smaller than many strategists’ forecasts. JPMorgan Chase & Co. had penciled $800 billion, with no change in the cash-balance estimate. Ten-year Treasury yields dipped slightly after Monday’s release, and were at 4.86% as of 3:07 p.m. in New York.

Despite the reduction in the estimate, the new projection still marks a record borrowing amount for the calendar fourth quarter. Part of the reason for the smaller figure is the magnitude of deferred tax receipts coming from areas of California and other states that had been granted extensions due to natural disasters, Treasury officials told reporters Monday.

Yields on longer-term Treasuries have soared since the department in August unveiled plans for increased issuance of those securities. Market participants are now eager to see the Treasury’s updated issuance plans, set for release Wednesday.

The federal deficit roughly doubled in the fiscal year through September compared with the year before, effectively reaching $2.02 trillion, forcing the Treasury to step up its borrowing.