US Treasury projects $618 billion borrowing in Q4, $800 billion in Q1 2027

However, excluding the benefit of the larger cash cushion, borrowing requirements are $24 billion higher than previously estimated. The Treasury expects to end December with a cash balance of $850 billion.

For the first quarter of 2027, the Treasury projected borrowing of $800 billion, assuming an end-March cash balance of $1 trillion.

The government borrowed $742 billion in the third quarter, ending September with a cash balance of $984 billion. The borrowing figure was above its August estimate of $739 billion but $30 billion lower than previously expected after adjusting for the higher-than-assumed ending cash balance, according to Reuters.

Investors will closely monitor the Treasury's quarterly refunding announcement on Wednesday for indications of potential changes to auction sizes in the coming quarters.

In August, the Treasury said it was continuing to evaluate possible future adjustments to coupon and floating-rate note auction sizes. This marked a shift from its May announcement, which had indicated the possibility of future increases in debt sales.

The change in language fuelled speculation that the Treasury could eventually reduce issuance of longer-dated bonds while relying more heavily on Treasury bills and short- to medium-term securities to meet its funding requirements.

Analysts see 20-year and 30-year bond auctions as the most likely candidates for reductions if the government changes its issuance strategy. Any increases in coupon issuance could instead be concentrated in the two- to seven-year maturity segment. Analysts remain divided over whether the Treasury could also increase the size of its benchmark 10-year note auctions, Reuters reported.

Investors will also watch for updates to the Treasury's debt buyback programme, which aims to support liquidity in the government bond market. The Treasury has increased the maximum size of its longer-dated buybacks to $6 billion per operation from $2 billion.