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Treasury Freezes Coupon Auction Sizes for Several Quarters as Financing Tilts to Bills

Lower short‑term yields have made bills the cheaper way to fund deficits.

Overview

  • The department said it will keep nominal note, bond and floating‑rate note auction sizes unchanged for at least the next several quarters.
  • Next week’s quarterly refunding totals $125 billion, with $58 billion in 3‑year notes, $42 billion in 10‑year notes and $25 billion in 30‑year bonds.
  • Treasury outlined TIPS reopenings and four buyback operations and said it anticipates purchasing up to $38 billion of off‑the‑run securities over the upcoming quarter to support liquidity.
  • Officials expect benchmark bill sizes to stay steady into late November, dip modestly in December and then rise by mid‑January based on expected cash flows.
  • Dealers largely expected the stance and generally do not foresee increased longer‑dated issuance until mid‑2026 or later, while Citi projects the bills share of debt could top 26% by end‑2027.