WASHINGTON, DC — The U.S. Treasury Department raised its borrowing estimate for the July-through-September quarter by $68 billion to $739 billion, reflecting weaker projected net cash flows as the government prepares to tap debt markets for more than $1.3 trillion across the second half of 2026.
Treasury expects to borrow another $628 billion in privately held net marketable debt during the October-through-December quarter, assuming it finishes the year with an $850 billion cash balance.
The third-quarter borrowing projection assumes Treasury will hold $950 billion in cash at the end of September. The $739 billion estimate is up from the $671 billion projected in May, primarily because of lower expected net cash flows, partially offset by a higher-than-anticipated cash balance entering the quarter.
Excluding the effect of the higher beginning cash balance, Treasury’s current borrowing estimate is $87 billion above the May projection.
The increased financing requirement comes as Treasury plans to keep the size of its nominal coupon and floating-rate note auctions unchanged for at least the next several quarters. The department indicated that existing auction sizes provide sufficient capacity to respond to changes in the fiscal outlook and the Federal Reserve’s System Open Market Account portfolio.
Treasury is monitoring private-sector demand for bills and Federal Reserve purchases of Treasury bills while evaluating whether future adjustments to coupon and floating-rate note issuance may be warranted.
As part of its August refunding, Treasury will sell $125 billion of securities to refinance about $96.3 billion of privately held notes and bonds maturing Aug. 15. The transactions are expected to raise approximately $28.7 billion in new cash from private investors.
The package consists of $58 billion of three-year notes maturing Aug. 15, 2029; $42 billion of 10-year notes maturing Aug. 15, 2036; and $25 billion of 30-year bonds maturing Aug. 15, 2056.
The three-year notes are scheduled for auction Tuesday, Aug. 11, followed by the 10-year notes Wednesday and the 30-year bonds Thursday. Each auction is scheduled for 1 p.m. EDT, with settlement on Aug. 17.
Treasury plans to cover its remaining quarterly financing needs through weekly bill sales, cash-management bills and regularly scheduled auctions of notes, bonds, Treasury Inflation-Protected Securities and two-year floating-rate notes.
Bill issuance will serve as a primary mechanism for absorbing short-term fluctuations in financing needs. Treasury expects to maintain current benchmark bill auction sizes in the coming weeks and may issue a short-dated cash-management bill around the end of August.
The department expects corporate and non-withheld tax receipts in mid-September to permit reductions in shorter-dated bill auction sizes that month. Auction sizes across the bill curve are expected to increase again in October as seasonal government outflows rise.
Treasury will keep its planned TIPS auction sizes unchanged from August through October. The schedule calls for an $8 billion reopening of 30-year TIPS in August, a $19 billion reopening of 10-year TIPS in September and a $26 billion new five-year TIPS issue in October.
The government’s cash position could also climb substantially during the period. While Treasury assumes a $950 billion Treasury General Account balance at the end of September, it projects the account could peak at roughly $1.05 trillion, plus or minus $50 billion, in late October because of anticipated large outflows.
Treasury is also maintaining its debt-buyback program. During the coming refunding quarter, the department expects to purchase as much as $38 billion of older, off-the-run securities to support market liquidity and as much as $25 billion of securities in the one-month-to-two-year maturity range for cash-management purposes.
The larger third-quarter financing projection follows comparatively modest borrowing during the April-through-June period. Treasury borrowed $190 billion in privately held net marketable debt and finished June with $919 billion in cash.
Treasury had projected $189 billion of borrowing and a $900 billion quarter-end cash balance in May. After adjusting for the higher cash balance, actual second-quarter borrowing was $18 billion below the earlier estimate.
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