Citi: Dealer survey suggests the U.S. Treasury may reduce long-bond issuance

Citigroup strategists are sticking with their prediction that the U.S. Treasury will reduce long-term bond issuance in next month's quarterly refunding announcement. The bank said questions in a survey sent to primary dealers on Friday indicate Treasury officials are considering such a move. Treasury sought dealers' views on long-end buyback operations and structural demand trends to assess "future adjustments to auction sizes for nominal coupon and floating rate notes." "We think these questions support our view that Treasury will reduce 20-year and 30-year auction sizes by $3 billion each on Nov. 4," Alejandra Vazquez Plata and Jason Williams wrote in a note to clients. "The significant long-end selloff since the last refunding announcement, and the relatively weak performance of the first few long-end buyback operations following the cap increase announcement, will prompt Treasury to shift long-end issuance toward T-bills."