US Treasury raises third-quarter borrowing estimate to $739 billion

Aug 3 (Reuters) - The ‌U.S. Treasury said ​on ​Monday it expects to borrow $739 billion in the third quarter, $68 billion more than it projected ‌in May, as lower projected cash flows were ⁠only partly offset by a higher-than-assumed starting cash balance.

Stripping out the ‌benefit of that larger starting ‌cushion, the increase in borrowing needs is $87 billion above the May estimate. The department's quarterly refunding statement ​assumes a cash balance of $950 billion at the end of September.

For the fourth quarter, Treasury projected borrowing of $628 ⁠billion, based on a year-end cash balance of $850 billion.

The department also said ​it borrowed $190 billion in the second quarter, ending June with a cash balance of $919 billion. That ​was $1 billion above its May ‌projection and $18 billion less than expected when excluding the higher than assumed end of quarter ⁠cash balance.

Treasury will detail its refunding plans, including auction sizes, on Wednesday. Traders will be watching closely for any signal ⁠that the department intends to lean more heavily on longer-dated debt ​in coming quarters.

The stakes for that announcement have risen in recent weeks. Oil prices have surged as the war between Israel and ‌Iran re-intensifies, deepening concerns about already-elevated inflation and pushing longer-dated Treasury yields to multi-year ‌highs.

Against that backdrop, analysts said Treasury has added incentive to ⁠stick to a predictable ‌issuance path and ​avoid any surprises that could further rattle a jittery bond market.

(Reporting by Karen BrettellEditing by Nick ‌Zieminski)

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