Quarterly Refunding 

U.S. Department 

Office of Deb
Office of Debt Management

Financing Near Term Outlook

 Estimated net marketable borrowing for FY 2006 is $188 bi

decline of $100 billion from the estimate last quarter.

 Estimated Net Marketable Borrowing

• $30 billion July-September• $104 billion October-December

 FY 2006 Q4 net marketable borrowing is $59 billion less tha

estimated in May. All major categories of receipts continue 

forecasts, while outlays have fallen below forecasts. 
Office of Debt Management

 April-June pay down was 

larger than projected, leading to large a reduction in bills outstanding.

 Net non-marketable 

issuance continues to taper off from prior year record.

 September 15 issuance 

raises nearly all new cash.

 October 15 outflows include 

a maturing off-cycle 10-year note.

 November 15 outflows are 

large.

Treasury Financing Requirements 

(Projected) (Actuals) 

Deficit Funding (Def + / Surplus -) -47 -97 

Means of Financing

Change in Cash Balance -17 -38 Net Non-Marketable Financing 7 4 Other* 15 29 Net Marketable Financing -51 -92 

Net Marketable Financing -51 -92 

Bills -125Nominal Notes 18TIPS 19Bonds -4

Notes:

Starting Cash Balance 8 8 Ending Cash Balance 25 46 

* Includes direct loan activity, changes in accrued interest, checks outstanding, minor miscellaneous transactions, discount and inflation aNote: Totals may not add due to rounding.

 April - June 2006

Marketable Treasury Coupon Flows 

Date

Maturing Coupon 

Securities 

(Excluding SOMA 

holdings)

Cou

Paym

August 15, 2006 22 2August 31, 2006 24 September 15, 2006 0 September 30, 2006 24 October 15, 2006 17 October 31, 2006 22 November 15, 2006 54 2November 30, 2006 23 
Office of Debt Management

 June cash balances rose 

earlier than usual due to early corporate payments.

 Early July balances ran 

higher than historical balances due to the change in the 5-year calendar.

 The net marketable pay 

down for Q2 was the largest since Q2 2001.

 Net Bill issuance fell 

dramatically.

 Net 2-year note issuance fell 

to levels not seen since Q2 2001.

Treasury Quarterly Net Marketable Borrowing

Calendar Quarter

17.8

-163.4

74.4

52.1

52.5

15.1

84.2

82.6

111.3

60.3 81.5

113.4

145.9

31.3

89.0

97.8

1

-200-160-120

-80-40

0

4080

120160

I-01 II III IV I-02 II III IV I-03 II III IV I-04 II III IV 

$ billions

Bills 2-under 5 years5-10 years 5-10 year TIPSOver 10 years Over 10 year TIPSBuybacks

Treasury Daily Operating Cash Balance

0

102030405060708090

100

Oct Nov Dec Jan Feb Mar Apr May Jun 

$ billions

FY 2004FY 2005FY 2006

N
Office of Debt Management

 Net nonmarketable issuance

for Q2 was below expectations. 

 Given recent OMB MSR 

estimates, revenues as a share of GDP are expected to remain mostly below the historical average, while the difference between outlays and revenues as a share of GDP declines sharply. 

Drivers of Financing Needs

-5

05

10152025

1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 

Fiscal Year

Percentage %

Net Interest as a Percentage of GDP Nominal GDP GrowthReceipts as a Percentage of GDP Outlays as a Percentage of GDP

Avera

Differenc

Source: OMB FY 2007 MSR

Treasury Quarterly Net Borrowing from Nonmark

 Calendar Quarter

-8.0

-5.0

-10.1

-2.2 -1.4

-1.7

-10.6

0.8

-5.5

-0.1 -0.7

7.6

-2.4

-8.4

7.6

0.8

4.5 3.9

-6.0

1.1

-15-10

-5

05

1015202530

I 00 II III IV I 01 II III IV I 02 II III IV I 03 II III IV I 04 II III IV 

$billions

State and Local Govt. SeriesSavings BondsForeign Series
Office of Debt Management

 Despite improvements in 

the fiscal outlook, we still forecast a sharp oneyear increase in marketable borrowing in FY 2007. 

Projected Net Marketable Borrowing and Hypothetical A

-10.0%

-7.5%-5.0%-2.5%

0.0%2.5%5.0%7.5%

10.0%12.5%15.0%

2006 2007 2008 2009 201

Percent

Net Marketable Borrowing (RHS)

Internal Treasury budget estimate used for FY 2006. Projections for FY 2007-2011 are based on OMB 2Future residual financing needs are spread proportionally across auctioned securities to maintain constan

Bars represent percenchange in average aufrom prior year (LHS)

Initial HypotheticBills $2-year $3-year $5-year $10-year $30-year $5-year TIPS $10-year TIPS $20-year TIPS $
Office of Debt Management

Debt Portfolio

 Average maturity of total outstanding debt remains stable around 55-5

over the next 5 years 

 Average maturity of issuance stabilizes between 54-55 months  The percent of debt maturing with 3 years or less to maturity declines t

percent

Assumptions used in the next 5 charts: Future residual financing needs are spread proportionally across auctio

securities to maintain constant maturity of issuance, based on hypothe

auction sizes 

 OMB 2007 MSR estimates, with internal Treasury estimate for current 
Office of Debt Management

 Average maturity stabilizes and 

slowly ascends with assumption of stable 30-year bond issuance.

 The end of FY 2006 average 

maturity of issuance (a 4-quarter moving average)is expected to reach 56-months.

 The share of 8-10 year notes is 

projected to approach bill levels, as bills’ share of the portfolio declines to historic lows.

Distribution of Marketable Debt Outstanding 

0%5%

10%15%20%25%30%35%

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 200

BILLS 2-3 YR NOTES 4-7 YR NOTES 8-10 YR NOTES 

Internal Treasury budget estimate used for FY 2006. Projections for FY 2007-2011 are based on OMB residual financing needs are spread proportionally across auctioned securities to maintain constant ma

DEBT MATURITY MEASURES 

2030405060708090

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 

months

Average Maturity of Issuance 1/

Average Maturity of Marketable 

Debt Outstanding 2/

 Internal Treasury estimate used for FY 2006. Net financing projections for FY 2007-2011 are based on OMB 2007 MSR needs are spread proportionally across auctioned securities to maintain constant maturity of issuance.

1/ Quarterly data are actuals through June 30, 2006. Actuals and fiscal year projections use a 4-quarter average. 2/ Quarterly data are actuals through June 30, 2006. Fiscal year projections are yearly data. 
Office of Debt Management

 Debt with a residual maturity 

of 3 years or less trends toward the lower end of historical ranges. 

 Bill issuance declined 

sharply due to seasonal tax inflows. TIPS and 5-year notes continue to gain as a percentage of issuance.

Percentage of Debt Maturing in Next 12 to 3

25%30%35%40%45%50%55%60%65%70%75%

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 

Maturing in 12 Months

Maturing in 24 Months

Maturing in 36 Months

Internal Treasury budget estimate used for FY 2006. Projections for FY 2007-2011 are based on OMB residual financing needs are spread proportionally across auctioned securities to maintain constant mat

Percentage Breakdown of Quarterly Issua

Fiscal Year 

0%

10%20%30%40%50%60%70%80%

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 

Bills 2-3 yrs 4-7 yrs 10-15 yrs Bonds 

Note: Data through June 30, 2006.
Office of Debt Management

 The bulk of net marketable 

borrowing through FY 2011 will be met by 5- and 10-year note issuance.

Treasury Annual Net Marketable Borrowing

Fiscal Year

-109 -100

-213 -97

204 336

379

216

200

353

202

-300-250-200-150-100

-50

0

50

100150200250300350400450

FY 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 200

$ billions

BuybacksOver 10 year TIPSOver 10 years5-10 year TIPS5-10 years2-under 5 yearsBills

Projected
Office of Debt Management

Uncertainty

 Further positive receipts surprises would help to smooth auction 

the next two years.

 If the forecast errors reverse, however, the current issuance patt

heavy reliance on bills in the 2nd quarter of FY 2007. Given the 

in bill supply recently, however, we believe the bill sector canaccommodate negative FY 2007 fiscal shocks.
Office of Debt Management

 Deficit estimates are 

significantly lower since May.

 Current coupon pattern and 

issuance amounts will provide approximately $205 billion of new financing in FY 06 and $200 billion in FY07.

FY 06 Deficit Estimates 

Primary Dealers* 

Current: 291 Range based on average absolute forecast error 273-309 28

Estimates as of: July 06 M

Note: Ranges based on errors from 1997-2005.

* Primary Dealers reflect average estimate.

Financing Residuals Given Current Issuance Calendar 

Assumes current coupon issuance pattern and issuance amount-- Weekly bill issuance at lev

outstanding FY $ amounts equal to September 30, 2005 total outstandin

-350-250-150

-50

50

150250350450550650

2006 2007 2008 2009 

Fiscal Years

$ billions

Net financing implied by FY2007 

OMB MSR deficit forecast

Net financing plus average absolute 

error in OMB estimate

Net financing

minus avg. absolute error in OMB est.

Bars indicate estimated change in financing required in given year for different deficit outcomes

Note: FY 2006 net financing amount is an internal estimate. 

Note: Average historical errors were estimated with a linear least-squares regression using OMB's budget forecasts since the 1989 B

1998.
Office of Debt Management

 The deficit as a 

percentage of GDP falls below the 40-year average of 2.3 percent in each fiscal year, except 2007.

 Debt held by the public 

trends below the 40-year average of 36 percent starting in FY 2009.

Surplus/Deficit as a Percentage of G

-7%-6%-5%-4%-3%-2%-1%

0%1%2%3%

1960 1965 1970 1975 1980 1985 1990 1995 2

Source: OMB MSR FY 2007

Debt Held by the Public as a Percentage 

0%

10%20%30%40%50%60%

1960 1965 1970 1975 1980 1985 1990 1995 2

Source: OMB MSR FY 2007 
Office of Debt Management

Capital Markets

 Foreign holdings of Treasuries have stabilized
Office of Debt Management

 Foreign holdings of U.S. 

Treasury debt as a percentage of total privately held are stable despite a small decline in official holdings at the FRBNY.

Foreign Holdings as a Percent of Total Privately Held Pu

0%

10%20%30%40%50%60%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2

Calendar Year

Percent

Estimated foreign holdings as % of private. 2/Foreign and International Institutional Holdings at FRBNY as% of private. 3/

Benchmark 

* 

Revisions

1/ Privately held debt excludes holdings of the Federal Reserve System.2/ Data through May 31, 2006. 3/ Source: Federal Reserve Bank of NY statistical release H4.1.

* 
Office of Debt Management

Auction Release Time Performance 

 No current quarter exceptions to Treasury’s 2 minute (+/- 30 seconds) target auction re

Auction Release Times for August 2005 - July 2006

Data through July 27, 2006

0:000:301:001:302:002:303:003:304:004:305:00

08/01/05 08/24/05 09/19/05 10/13/05 11/08/05 11/30/05 12/28/05 01/23/06 02/14/06 03/13/06 04/04/06 04/26/06 05/23/06 06/19/06 

(In Minutes and Seconds)

Target release time