U.S. Long-Term Treasury Sales Seen Falling in 2027

Key Facts

U.S. debt markets are watching to see whether the Treasury will change its issuance mix in the quarterly refunding statement due Wednesday, November 4, after dealers forecast that revised guidance could open the door to lower sales of longer-dated bonds in 2027. That could be accompanied by more Treasury bill and shorter-dated note auctions, according to a Bloomberg report. The forecast does not represent an announced Treasury decision; markets are awaiting the official statement to learn whether issuance policy will change. The debate comes as long-term bond sizes remain unchanged in the latest published schedule and banks differ on the impact of reducing them. Attention is focused on what the statement says about upcoming auction sizes and the maturity mix of the debt.

Citigroup offers one of the more specific forecasts, expecting the Treasury to announce cuts to 20- and 30-year bond sales starting in November. That would, in the bank's description cited by Bloomberg, run counter to guidance in the previous quarterly refunding statement. In August, the Treasury said it expected to maintain nominal coupon and floating-rate note auction sizes for at least the next several quarters. The department said at the time that any changes would be assessed based on structural demand trends and the costs and risks of issuance paths. Citigroup's forecast therefore puts the timing and scale of any change at the center of the test facing the next statement, without settling what the Treasury will actually decide.

Banks do not share a common view on reducing the maturity of long-term debt. A JPMorgan team said cuts to long-term bond sales would be unwise given the volume of borrowing required over the coming years. The team also pointed to signs of faltering demand for Treasury bills, raising questions about whether short-term issuance could absorb any potential increase. By contrast, Citigroup's forecast of cuts to 20- and 30-year bonds reflects the possibility of redistributing issuance across maturities. The disagreement comes ahead of the financing estimates and quarterly statement, the two immediate milestones that will clarify borrowing calculations and auction policy in this cycle.

Treasury tables show that auction sizes for the longer-dated bonds cited did not change between September and October: 30-year bond issuance was 25 billion dollars in August, then 22 billion dollars in each of September and October. 20-year bond issuance was 16 billion dollars in August, then 13 billion dollars in each of the following two months. The August statement had indicated an expectation to maintain coupon and floating-rate note auction sizes for at least several quarters. These figures provide the baseline against which any potential changes in the November statement will be measured. But on their own, they do not reveal whether the Treasury will change its guidance or keep sizes as they are.

The borrowing estimates published in August reflect the scale of financing needs in the debate. The Treasury forecast borrowing 739 billion dollars from the private market in the quarter spanning July to September 2026, an increase of 68 billion dollars from its May estimate. It also forecast borrowing 628 billion dollars in the October-to-December quarter. In a separate August refunding announcement, the department offered 125 billion dollars in securities to refinance about 96.3 billion dollars of notes and bonds maturing on August 15, and estimated that it would raise about 28.7 billion dollars in new cash from investors. These figures show that decisions on issuance maturities are made within financing needs that include refinancing maturing debt and raising new funds, not auction sizes alone.

The Treasury Borrowing Advisory Committee recommended in May that coupon, floating-rate note and inflation-protected securities auction sizes be kept at their current levels. In the committee's minutes, the median dealer forecast pointed to a 1.3 trillion dollar funding gap for fiscal years 2027 and 2028, based on current coupon auction sizes and Treasury bill supply. A department official also said that adjustments to issuance sizes and the debt mix are made gradually, based on structural demand trends and an assessment of the least-cost debt mix over the long term. The Treasury says changes to debt management policy are typically discussed through the quarterly refunding process near the middle of each calendar quarter. In an earlier review, the department cited reductions in the size of some coupon auctions in 2021 and 2022, noting that regular, predictable issuance does not preclude adjustments to plans in response to new information and demand signals.

The Treasury also expanded buybacks of longer-dated bonds to support market liquidity, raising the maximum size of each operation from 2 billion dollars to at least 4 billion dollars from September 9 through the end of the refunding quarter on November 4. Department data show that the increase remains in effect during the specified period, while auction sizes stayed unchanged in September and October. After the expansion was announced in August, the 10-year Treasury yield fell to 4.64% on August 19 from 4.71% in the previous session. The 30-year yield also declined to 5.18% from 5.28%, according to the Associated Press. The Treasury linked buybacks to supporting liquidity in longer-dated nominal securities, while the effect of any new issuance adjustment will depend on what the department announces.

The announced steps in the current refunding cycle begin with the publication of financing estimates on November 2, 2026, followed by the quarterly policy statement on November 4. The Treasury said changes to debt management policy are typically communicated through this quarterly process, making the statement the expected moment of decision for the forecasts in circulation. After its release, the department's guidance on upcoming issuance and sizes will become clear, including whether it will adjust auctions of longer-dated bonds. Until then, forecasts of cuts to 20- and 30-year bonds and increased short-term issuance remain views attributed to dealers and banks. The Treasury has not announced an official decision on the matter in the available materials.