April 13, 2018 / 5:15 PM / in 7 months

U.S. asks bond dealers about raising TIPS supply

NEW YORK, April 13 (Reuters) - The U.S. Treasury Department on Friday asked Wall Street’s top firms whether it should increase the sizes on its sales of Treasury Inflation Protected Securities, or TIPS, as a part of its effort to meet its funding needs.

The federal government is expected to sell more debt in the coming years to finance its operations following the tax overhaul last December and a $1.3 trillion spending plan enacted in March.

On Monday, the Congressional Budget Office said the federal deficit will grow to $804 billion in fiscal 2018, which ends on Sept. 30, up from $665 billion in fiscal 2017. The annual shortfall in revenues to meet government spending will “grow substantially” before stabilizing in 2023, the CBO said.

The Treasury in particular would like to know whether it should add a new five-year TIPS issue in the second half of the year. Currently, it issues only one new five-year TIPS issue each year.

The Treasury will sell $16 billion of a new five-year TIPS issue on Thursday.

The subject of TIPS is one of the several topics in the Treasury’s latest quarterly survey of the top 23 primary dealers, or firms that do business directly with the Federal Reserve and participate in every Treasury auction.

The dealers’ responses to the survey are due at noon (1600 GMT) on April 23 prior to a meeting with Treasury officials on April 26-27. (Reporting by Richard Leong; Editing by Dan Grebler)

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