The U.S. Treasury Department announced on Wednesday that quarterly issuance of longer-term bonds would remain unchanged.RouletteseriesIn line with market expectationsRouletteseriesIt also announced that its first plan to buy back existing bonds in more than 20 years will be launched this month.

The U.S. Treasury Department said in a statement that it would sell $125 billion of bonds, including 3-year, 10-year and 30-year notes, in next week's so-called quarterly refinancing issue.

After three consecutive quarters of increased medium-and long-term bond issuance, the Ministry of Finance said in January that it did not expect further increases this year. They reiterated that they did not expect to increase regular bond issuance "at least for the next few quarters".

When the Fed slows its pace of reducing its Treasury holdings-a measure that many traders expect to be announced on Wednesday, the pressure on the Treasury is expected to ease.

The Treasury said the previous increase in the size of the issue "enabled it to cope well with the fiscal outlook and potential changes in the speed and duration of future SOMA redemptions." SOMA refers to the abbreviation of treasury bonds held by the Federal Reserve.

The Fed currently allows up to $60 billion of Treasuries a month to flow out of its balance sheet. Halving that figure, as many economists predict, would reduce the amount of money the Treasury needs to raise from private investors.

Fed policy makers will issue a policy statement in Washington at 2 p.m. EDT. Federal Reserve Chairman Jerome Powell then held a press conference that may provide clues as to whether officials still expect interest rates to be cut later this year, which is expected to help curb the Treasury's growing burden on bond payments.

Wednesday's Treasury statement also provided details of a long-awaited new bond buyback program. The operation is designed to support market liquidity and improve cash management. Officials spent more than a year analyzing the benefits of bond buybacks and developing an operational framework.

The first operation is scheduled for May 29. Until July, the Treasury plans to buy back up to $2 billion a week of nominal interest-bearing bonds and up to $500m of inflation-protected Treasuries (TIPS).

The upcoming buyback bears little resemblance to the buyback plan of more than 20 years ago. The buybacks were carried out during a historic period of budget surpluses, giving officials the opportunity to redeem some outstanding high-interest bonds.

As for next week's refinancing offering, the $125 billion will consist of the following components, which will raise about $17.2 billion in new cash for the Treasury.

With regard to Treasury bills, the Ministry of Finance announced that six-cycle cash management notes (CMB) would serve as a new benchmark for the market.

"investors have been very receptive to six-cycle CMB, and upgrading to a benchmark will further support demand," the Treasury said. The department said the decision was made after taking into account the outlook for the supply of Treasury bills in the medium term, and the tender scale of short-term Treasury bills is expected to be close to February and March highs by July.

Many traders had expected Treasury issuance to fall sharply in the coming month.

Inflation protected bonds and floating rate bonds

The Ministry of Finance said issuance of floating-rate bonds also remained stable over the next three months.

The Treasury said the issuance of some inflation-protected bonds would continue to increase to maintain a stable share of these bonds relative to the overall bond. The decision met the expectations of many traders.

The June renewal of the five-year TIPS will increase by $1 billion, and the new 10-year TIPS in July will increase by the same amount.

While an end to quantitative tightening by the Fed is good for the Treasury, over time, given the persistent and historically high US budget deficit, the US government is expected to need to increase longer-term bond issuance again.