--- title: "US Treasury Expected to Maintain Debt Issuance Guidance, Aiming to Stabilize Long-End Yields Before Midterm Elections" type: "News" locale: "en" url: "https://longbridge.com/en/news/294712273.md" description: "The US Treasury is expected to maintain its current forward guidance on Treasury issuance this week, continuing to rely on short-term bills to meet financing needs and avoiding a push higher in long-term yields. Although expanding fiscal deficits and a rising share of short-term debt increase risks, political considerations dominate as midterm elections approach. The market generally believes that strategy adjustments will still be needed in the future, with new supply likely prioritized at the front end of the yield curve" datetime: "2026-08-03T15:12:20.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/294712273.md) - [en](https://longbridge.com/en/news/294712273.md) - [zh-HK](https://longbridge.com/zh-HK/news/294712273.md) --- # US Treasury Expected to Maintain Debt Issuance Guidance, Aiming to Stabilize Long-End Yields Before Midterm Elections The US Treasury will announce its latest quarterly refinancing plan this week. The market widely expects Treasury Secretary Bessent **to again maintain the current forward guidance on Treasury issuance, meaning that the issuance volume of medium- and long-term Treasuries will not increase for at least the next few quarters, while continuing to rely on short-term Treasury bills (T-Bills) to meet financing needs.** This decision means that the US Treasury will continue to avoid sending signals in the short term that could push up long-term US Treasury yields. However, as the fiscal deficit continues to expand, the proportion of short-term debt keeps rising, and the market re-bets on the Federal Reserve tightening policy in the coming months, the risks associated with this financing strategy are accumulating. According to Bloomberg, ahead of the quarterly debt financing statement released on Wednesday local time, **most primary dealers expect the Treasury not to adjust its forward guidance.** Although Bessent has previously criticized this policy for artificially suppressing long-term financing costs, **the Trump administration now also faces political pressure with midterm elections approaching, and any policy adjustments that might further push up long-term yields are not what the Treasury wants to see.** Meanwhile, the yield on 30-year US Treasuries rose to its highest level since 2007 last week, significantly increasing the cost of long-term debt issuance. While continued reliance on short-term Treasury bills can lower current financing costs, it also exposes US debt more to the risk of short-end interest rate fluctuations. ## Whether to Modify Forward Guidance: Political Considerations Outweigh Debt Management The focus of market debate is whether the Treasury will adjust the issuance forward guidance that has been used to date. This guidance was first formed during the Biden administration, with its core content being to maintain the issuance volume of medium- and long-term coupon-bearing Treasuries unchanged for "at least the next few quarters." **The market believes that this commitment helps stabilize long-term yields but also limits the Treasury's flexibility to adjust its financing structure in the future.** JPMorgan strategists led by Jay Barry believe that from a debt management perspective, the Treasury should remove the word "at least" from the statement to leave policy room for expanding coupon-bearing Treasury issuance in the future. However, the team also pointed out that **with midterm elections approaching, political factors are dominating decision-making, and avoiding further rises in yields clearly aligns better with the government's interests.** Blake Gwinn, Head of US Rates Strategy at RBC Capital Markets, also stated that while modifying forward guidance could increase the Treasury's operational flexibility in the future, the market might interpret it as a signal of future increases in long-term Treasury issuance, thereby pushing up yields. He believes that this adjustment will happen sooner or later, but the longer it is delayed, the greater the impact on the market when the guidance is eventually removed. ## Short-Term Financing Share Continues to Rise, Future Financing Pressure Accumulating Since Bessent took office, the Treasury has continuously met financing needs by increasing T-Bill issuance. In the current environment of high long-end yields, this strategy has effectively reduced financing costs. **But more and more institutions believe that this is merely postponing risks.** Bank of America calculates that if the Treasury maintains the current issuance volume of coupon-bearing securities until fiscal year 2027, the proportion of T-Bills in outstanding debt will approach 25%, reaching the highest level since 2004 (excluding special periods during the global financial crisis and the pandemic). JPMorgan expects that the US Treasury will begin to face new financing gaps in fiscal year 2027 (starting October 1, 2026), estimating the cumulative financing gap from 2027 to 2030 to be approximately $3.7 trillion. Meanwhile, **economists generally expect that the US fiscal deficit will remain at an annual scale of about $2 trillion in the coming years, meaning that government financing needs will continue to grow.** However, there is currently no lack of demand for short-term Treasury bills. Crane Data shows that the size of US money market funds has risen to approximately $8.3 trillion. Bessent has previously stated that stablecoin issuers are expected to become important new buyers of T-Bills in the future. In addition, the Federal Reserve is currently reinvesting funds from maturing mortgage-backed securities (MBS) into T-Bills, providing additional demand support for short-end financing. ## Few Institutions Expect the Treasury to Signal Adjustments Although the mainstream market expectation is that the Treasury will maintain its current wording, some institutions still expect minor adjustments in this statement. **Deutsche Bank, Wells Fargo, and CIBC Capital Markets all expect that the Treasury may adjust the wording of its forward guidance to leave room for expanding coupon-bearing Treasury issuance as early as February next year.** Wells Fargo strategists led by Michael Pugliese stated that they would not be surprised if the Treasury continues to maintain its original wording this time, especially considering that the next refinancing statement in November will be released the day after the midterm elections. However, the team believes that whether due to changes in fiscal fundamentals or recommendations from the Treasury Borrowing Advisory Committee (TBAC), the issuance strategy will ultimately need to be adjusted. ## If Coupon-Bearing Treasury Issuance Expands, Market Expects Priority on Short- to Medium-Term Maturities The market generally expects that **even if the Treasury decides to expand the issuance of coupon-bearing securities in the future, the new supply is more likely to be concentrated at the front end of the yield curve, rather than in long-term Treasuries such as the 10-year, 20-year, or 30-year.** As of last weekend, the yield on 5-year US Treasuries was approximately 4.45%, the 10-year was around 4.73%, and the 30-year was as high as 5.27%, with long-term financing costs significantly higher than those at the short and medium ends. In its May refinancing statement, the Treasury stated that it was evaluating future issuance plans for coupon-bearing securities, focusing on studying the balance between cost, risk, and changes in structural demand across different issuance structures. TD Securities strategists Gennadiy Goldberg and Molly Brooks believe that **this wording implies that the Treasury is more inclined to arrange any future increases in coupon-bearing securities issuance at the front end of the yield curve.** In addition to issuance strategy, the market will also watch whether the Treasury further discloses plans to invest part of its excess cash in the repo market. The Treasury has previously sought opinions from primary dealers on this issue in its quarterly surveys. **If the issuance volume remains unchanged, the Treasury plans to issue $58 billion in 3-year Treasuries on August 11, $42 billion in 10-year Treasuries on August 12, and $25 billion in 30-year Treasuries on August 13.** ### Related Stocks - [JPM.US](https://longbridge.com/en/quote/JPM.US.md) - [RY.US](https://longbridge.com/en/quote/RY.US.md) - [BAC.US](https://longbridge.com/en/quote/BAC.US.md) - [DBK.DE](https://longbridge.com/en/quote/DBK.DE.md) - [DB.US](https://longbridge.com/en/quote/DB.US.md) - [WFC.US](https://longbridge.com/en/quote/WFC.US.md) - [CM.US](https://longbridge.com/en/quote/CM.US.md) - [TD.US](https://longbridge.com/en/quote/TD.US.md) - [JPM-M.US](https://longbridge.com/en/quote/JPM-M.US.md) - [JPM-C.US](https://longbridge.com/en/quote/JPM-C.US.md) - [JPM-D.US](https://longbridge.com/en/quote/JPM-D.US.md) - [JPM-L.US](https://longbridge.com/en/quote/JPM-L.US.md) - [8634.JP](https://longbridge.com/en/quote/8634.JP.md) - [JPM-K.US](https://longbridge.com/en/quote/JPM-K.US.md) - [JPM-J.US](https://longbridge.com/en/quote/JPM-J.US.md) - [BAC-Q.US](https://longbridge.com/en/quote/BAC-Q.US.md) - [BML-L.US](https://longbridge.com/en/quote/BML-L.US.md) - [BAC-L.US](https://longbridge.com/en/quote/BAC-L.US.md) - [BAC-K.US](https://longbridge.com/en/quote/BAC-K.US.md) - [BML-H.US](https://longbridge.com/en/quote/BML-H.US.md) - [BAC-N.US](https://longbridge.com/en/quote/BAC-N.US.md) - [BAC-E.US](https://longbridge.com/en/quote/BAC-E.US.md) - [MER-K.US](https://longbridge.com/en/quote/MER-K.US.md) - [BAC-O.US](https://longbridge.com/en/quote/BAC-O.US.md) - [BML-G.US](https://longbridge.com/en/quote/BML-G.US.md) - [BAC-M.US](https://longbridge.com/en/quote/BAC-M.US.md) - [BAC-B.US](https://longbridge.com/en/quote/BAC-B.US.md) - [BML-J.US](https://longbridge.com/en/quote/BML-J.US.md) - [BAC-S.US](https://longbridge.com/en/quote/BAC-S.US.md) - [BAC-P.US](https://longbridge.com/en/quote/BAC-P.US.md) - [8648.JP](https://longbridge.com/en/quote/8648.JP.md) - [03KB.DE](https://longbridge.com/en/quote/03KB.DE.md) - [DPB.DE](https://longbridge.com/en/quote/DPB.DE.md) - [WFC-D.US](https://longbridge.com/en/quote/WFC-D.US.md) - [WFC-L.US](https://longbridge.com/en/quote/WFC-L.US.md) - [WFC-Y.US](https://longbridge.com/en/quote/WFC-Y.US.md) - [WFC-C.US](https://longbridge.com/en/quote/WFC-C.US.md) - [WFC-Z.US](https://longbridge.com/en/quote/WFC-Z.US.md) - [WFC-A.US](https://longbridge.com/en/quote/WFC-A.US.md) ## Related News & Research - [Short-term offers yield 4%+, expert says](https://longbridge.com/en/news/294566678.md) - [Government Bonds Now Have An Inconvenience Yield](https://longbridge.com/en/news/294543296.md) - [Suze Orman: Treasuries are paying this much -- why you're missing out](https://longbridge.com/en/news/294611559.md) - [This 6.7%-yielding pipeline stock just raised its payout again -- here's why there's no stopping it now](https://longbridge.com/en/news/294587454.md) - [U.S. 6-month bills high rate 3.855%](https://longbridge.com/en/news/294714147.md)