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2026-11-04 22:46:32
[US Treasury Revises Issuance Guidance, Paving the Way for Reduced Long-Term Issuance] The US Treasury Department has revised its guidance on Treasury bill and bond auctions, which has been in use since early 2024, potentially opening the door to reducing the issuance of its longest-term debt in 2027. "Based on current estimates of borrowing demand, the Treasury expects to maintain the size of its nominal coupon bonds and FRNs (Free Rate Notes) auctions over the next few quarters," the Treasury said in a statement Wednesday. For over two years, officials had stated that the issuance would remain unchanged for "at least" several quarters. Removing the "at least" qualifier means the Treasury could consider reducing the issuance of long-term Treasury securities as early as 2027. The statement said it will "engage with various market participants to better understand the supply and demand dynamics of US Treasury securities." Most brokers had anticipated some adjustment to the guidance as the latest measure by Secretary Scott Bessenter to curb the surge in long-term yields this year. He had previously unexpectedly expanded the scale of long-term bond repurchase agreements just two weeks after announcing the repurchase arrangements in August. But the move failed to stop yields from rising, with the 30-year Treasury yield surging to its highest level since 2002 last month. Market participants are divided on the potential impact of Wednesday's statement, with some believing that yields will not change much after retreating from their October highs.
