IEEPA refunds arrived in force

Research evidence excerpt

IEEPA refunds arrived in force

Barclays | US Money Markets

FIGURE 1. IEEPA refunds surged... FIGURE 2. ...but bill supply is still on track

Source: US Treasury, Barclays Research Source: US Treasury, Barclays Research

According to the court documents yesterday, to date, $104bn in refunds have been accepted, of

which $71bn has already been disbursed. That leaves about $33bn in the pipeline to be

finalized and transmitted to Treasury for payment. We expect a meaningful share of that,

on the order of $20bn, to be paid in July.

In addition, CBP opened a new processing channel at the end of June to handle more

complex reconciliation entries, which should account for the remaining $30bn within the

CAPE purview. However, these claims were only recently filed and will likely take time to work

through the system before payments are made. While CBP has clearly improved processing

speed, lags will remain, suggesting that perhaps one-third to one-half of this tranche could

be disbursed in July.

Finally, the remaining roughly $30bn, representing refunds outside the CAPE purview, is likely to

take longer to resolve, as the legal pathway is less clear and CBP has previously argued that it

may not have the authority to process these claims.

While uncertainty about timing remains elevated, our baseline is that Treasury will need to

fund an additional $30–35bn in refunds over July and slightly less than that in August and

September. For now, this does not materially change our expectation for roughly $250bn

in net bill issuance to private investors during July, as refunds looks to be more of a pull-

forward from July into June. We expect Treasury to continue increasing front-end auction sizes

over the next few rounds, reaching around $100bn, $95bn, and $90bn in the four-, six-, and