MediumIV Macro Policy & Sovereign Debt2 November 2026, Monday · 23:00 TRT (UTC+3)
US Treasury projects 800 billion dollars of first-quarter borrowing
On 2 November the US Treasury projected net marketable borrowing of 618 billion dollars for October–December and 800 billion dollars for January–March. The fourth-quarter estimate was 10 billion dollars lower than in August.
The Treasury said the decline mainly reflected a higher-than-expected cash balance at the start of the quarter; excluding that, the estimate is 24 billion dollars above August's. In July–September the Treasury borrowed 742 billion dollars and ended the quarter with 984 billion dollars in cash. It assumes a cash balance of 850 billion dollars at end-December and 1 trillion dollars at end-March.
The figures set the stage for the 4 November refunding statement. Dealer previews compiled by Bloomberg expect the 3, 10 and 30-year auctions to stay unchanged at 125 billion dollars in total. If coupon sizes hold, bills will absorb the increase; the bill share was about 22% in September, above the 20% recommended by the Treasury Borrowing Advisory Committee in 2024.
Dealers are split. Citigroup expects cuts to 20 and 30-year auctions this month, while JPMorgan sees sizes held until August 2027. CME FedWatch data cited by FXStreet put the probability of a hike on 8–9 December at about 73%. With financing leaning on bills, that 73% probability sets the cost itself.
Talay assessment
Bottom line
Borrowing needs are growing regardless of the election; the real decision is which maturities will fund them. If the coupon lock holds, most of the 800 billion dollars in the first quarter falls on bills, speeding the pass-through of a Fed hike to the interest bill. The most likely path is unchanged sizes with looser guidance language.
Likely effects
- Front-end ratesNegativeWeeks
More bill supply, at a time when a December hike is priced at 73%, keeps front-end yields elevated and ties the interest bill to Fed decisions.
- Extended-maturity yieldsUncertain1–6 months
The coupon lock adds no extra supply at the 30-year point, limiting term premium through this channel, though the risk of the cut Citigroup expects or a 2027 change remains.
- Dollar liquidityNegative1–6 months
Cash rising from 850 billion dollars at end-December to 1 trillion at end-March drains bank reserves in the first quarter.
- TürkiyeNegative1–6 months
Elevated US front-end rates keep a high floor under emerging-market dollar borrowing, which feeds into the cost of Türkiye's dollar-denominated issuance.
Possibilities, ranked
- 1Sizes held, language loosened55%
The 125 billion dollar package is kept on 4 November and the 'at least the next several quarters' formula is replaced with more flexible wording.
Watch: The guidance sentence in the 4 November refunding statement
- 2Signal of cuts at the 20 and 30-year points30%
The Treasury signals smaller 20 and 30-year auctions and the bill share rises above 22%.
Watch: 20 and 30-year auction sizes and the next bill share data
- 3Coupon increases brought forward15%
The Treasury brings forward language on coupon increases to cap the bill share, and extended-maturity yields rise.
Watch: The path of the 30-year yield after the refunding
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- October–December borrowing▼ $618bn
- January–March borrowing▲ $800bn
- End-December cash▼ $850bn
- Bill share (September)▲ 22%