E-piphany

“This is a very important point for the markets to understand: The days of steadily rising Treasury supply are likely behind us,” said William O’Donnell, head of U.S. government-bond strategy at RBS Securities in Stamford, Conn.

See what I mean about math skills? Please explain to me how the government can borrow $1 trillion every year in addition to its rolling debt and not have that result in more Treasury supply? I will assume that Mr. O’Donnell was just quoted out-of-context. Maybe he put the accent on the word steadily.

It could be that the size of the quarterly refunding is maxed out, but these days the quarterly refunding isn’t even a particularly large part of the total issuance. Treasury supply will continue to rise for the foreseeable future.