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By Greg Robb

Short-dated bill auction sizes will be reduced in December before increasing in the following month

Analysts said there was still uncertainty over Treasury Secretary Scott Bessent’s long-term debt-management strategy.

The refunding: Treasury announced Wednesday it would sell $125 billion in notes and bonds next week – the same amount as last quarter. This issuance will refund $98.2 billion of notes maturing on Nov. 15 and raise new cash of approximately $26.8 billion.

The department will auction $58 billion of 3-year Treasury notes BX:TMUBMUSD03Yon Nov. 10; $42 billion of 10-year notes BX:TMUBMUSD10Yon Nov. 11; and $25 billion of 30-year bonds BX:TMUBMUSD30Y on Nov. 12.

Auction sizes: Treasury repeated its guidance that coupon auction sizes will remain steady “for at least the next several quarters.” However, the agency said it “has begun to preliminarily consider future increases to nominal coupon and floating rate note auction sizes.”

Bill issuance: Treasury said that based on current fiscal forecasts, it expects to modestly reduce the short-dated bill auction sizes during December. But by the middle of January, the department anticipates increasing bill auction sizes.

Treasury buybacks: Treasury said it would purchase up to $38 billion in off-the-run securities across buckets for liquidity support and up to $25 billion in the 1-month to 2-year bucket for cash-management purposes. Treasury said it expects to resume cash-management buybacks in December after pausing them in the September tax period.

Big picture: Analysts are debating when coupon sizes will need to be bumped higher once again. Treasury has held auction sizes steady since April 2024.

Stephen Stanley, chief U.S. economist at Santander, said he thought the current schedule of coupon issue sizes could last for the majority of 2026.

Thomas Simons, chief U.S. economist at Jefferies, said he thought the Treasury would not need to increase nominal coupon auction sizes for the duration of the fiscal year through Sept. 30.

Simons noted that there were “a number of wildcards” that could impact Treasury’s financing needs. He noted the Supreme Court’s ruling on President Donald Trump’s tariffs might eventually require the Treasury to refund hundreds of billions in collections. Additionally, personal income-tax refunds may be higher than they have been in recent years due to the Republican budget package passed in July, he said.

Will Compernolle, economist at FHN Financial, noted that Bessent has said he believes the best path for financing Treasury debt is through more bills now and longer-maturity issuance later.

Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, said there was still uncertainty over Bessent’s long-term issuance strategy.

-Greg Robb

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