The Treasury refunding announcement came and went without apparent incident on Wednesday, when coupons were left unchanged as expected, consistent with last quarter’s guidance.

The $125 billion refunding headline ($58 billion threes, $42 billion 10s, $25 billion for the long bond) was in line with expectations.

Treasury reiterated that coupon increases are over for the foreseeable future. “Based on current projected borrowing needs, Treasury does not anticipate needing to increase nominal coupon or FRN auction sizes for at least the next several quarters,” the statement said.

So, auction sizes won’t increase for the rest of the year, again consistent with dealers’ expectations.

Note that a lot hangs on the parameters and timeline for the Fed’s QT taper. It’s safe to say the Committee will let MBS continue to roll off at the current rate, while lowering the caps on Treasurys in an effort to shift the composition of the balance towards a longer-term goal of an all-Treasury SOMA.

Crucially, the Fed’s quite likely to start favoring bills, consistent with recent remarks from Chris Waller and Jerome Powell himself. Ultimately, the Fed’s medium- to long-term aim is to shed MBS and shorten the WAM of its Treasury holdings.

Treasury on Wednesday said bill auction sizes will increase in the near-term to cover end-of-May cash needs, after which short-dated actions will be “modestly” lower ahead of a mid-June corporate tax date before rising back to “levels at or near the highs from February and March” in July.

“My lone observation on the QRA: The most important part for rates is that Treasury has continued to stick to their prior market guidance of not expecting to increase nominal coupon sizes for the next several quarters, because if they were to deviate from that we [would] have a resumption of the term-premium scare,” Nomura’s Charlie McElligott said. “But in the meantime, the MMF AUM boom [and] RRP balances give the market confidence that the bull supply can be digested with no coupon supply shock pending.”

Other highlights:

• The six-week cash management bill won benchmark status
• The long-awaited buyback program will start on May 29 with weekly operations of up to $2 billion for nominal coupons and $500 million TIPS

The refunding details and TBAC minutes came on the heels of a higher-than-expected financing estimate which, at $243 billion, overshot Treasury’s guidance by enough to raise a few eyebrows among market participants with a reason to care, if not among laypeople.