By Karen Brettell and David Lawder
(Reuters) - The U.S. Treasury Department said on Monday it expects to borrow $776 billion in the fourth quarter, $76 billion less than it had anticipated in July, on expectations of higher receipts, which will be somewhat offset by higher outlays.
A U.S. Treasury official said part of the reason for the increased revenue estimates in the current quarter is that previously deferred income tax payments from California and some other states because of natural disasters were now starting to flow into the Treasury.
The reduced $776 billion October-December borrowing estimate would still be a record amount for the period, the largest since $689 billion borrowed in October-December 2021 amid high COVID-19 relief outlays.
Treasury yields fell slightly after the announcement, with benchmark 10-year yields last at 4.86%.
The Treasury also announced it expects to borrow $816 billion in debt in the first quarter of 2024.
That would also be a record for the period, but the Treasury noted that there have been past cases in which borrowings plus cash balance drawdowns have been higher for the period. The Treasury estimates a high cash balance of $750 billion for both end-December and end-March.
In the third quarter of 2023, the Treasury said it borrowed $1.01 trillion and ended that quarter with a cash balance of $657 billion.
That was the largest net debt issuance during a third quarter period. It was, however, well below the almost $3 trillion the Treasury borrowed in the second quarter of 2020, when the government ramped up spending due to COVID business closures.
(Reporting By Karen Brettell; Editing by Andrea Ricci)