Primer: Quarterly Refunding due Wednesday August 5th at 13:30BST/08:30EDT
The US Treasury will release its Q3 Quarterly Refunding Announcement on Wednesday at 13:30 BST/08:30 EDT.
The Treasury ended Q2 with a cash balance of USD 919bln, above the USD 900bln estimate at the start of the quarter. For Q3, Treasury expects to borrow USD 739bln in privately-held net marketable debt (prev. saw 671bln), assuming an end-of-September cash balance of USD 950bln (prev. saw 950bln). The borrowing estimate is USD 68bln higher than announced in May 2026, primarily due to lower projected net cash flows, partially offset by the higher-than-assumed beginning-of-quarter cash balance. Excluding the higher-than-assumed beginning-of-quarter cash balance, the current quarter borrowing estimate is USD 87bln higher than announced in May. Looking ahead to Q4, the Treasury expects to borrow USD 628bln in privately-held net marketable debt, assuming an end-of-December cash balance of USD 850bln.
As always, focus will lie on the guidance to see whether the Treasury maintains language that the "Treasury anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters".
JPMorgan said the USD 3.7tln funding gap it expects to emerge over the next four fiscal years means officials should adjust the wording of their long-standing guidance on auction sizes to meet the Treasury's objective of "prudent debt management". Specifically, it said the words "at least" should be removed from the line stating that auction sizes are expected to remain steady for "at least the next several quarters". However, JPMorgan said political considerations were likely to drive the decision. It added that changing the guidance next week could unsettle the bond market ahead of November's midterm elections, pushing long-maturity borrowing costs higher when they are already near their highest levels since President Trump took office. Treasury Secretary Bessent last year explicitly linked issuance plans to yield levels. JPMorgan therefore believes the US Treasury will avoid unsettling bond markets ahead of the crucial midterm elections and defer changes that would raise the prospect of larger bond sales in its QRA statement.
Wrightson also expects guidance to be left unchanged, but states that "the question of when to start raising them is probably creeping higher on the Treasury’s planning agenda".
Providing the Treasury maintains next quarter's auction sizes as expected, the issuance table should look like this:
The Quarterly Refunding has become one of the more reliable curve events on the US calendar since Treasury shifted issuance toward bills, with the announcement itself rather than the borrowing estimate typically doing the work: past episodes where the mix or the forward guidance on coupon sizes surprised have repriced the long end and term premium within minutes, while in-line statements have faded quickly. The relevant distinction here is between the financing estimates, which are arithmetic and largely previewed, and the language on nominal coupon and FRN sizes, which is the policy signal. Dealers are split not on the numbers but on the wording, with the street argument being that an eventual removal of the phrase anchoring steady auction sizes telegraphs larger coupon sales and therefore duration supply; the counterweight is the administration's stated sensitivity to long-maturity yields, which in prior episodes of this kind has pushed issuance decisions toward the bill curve and buybacks rather than coupon increases. A higher borrowing estimate driven by weaker net cash flows, rather than by a lower starting cash balance, reads as deficit-driven supply and is the less benign variant for the back end. The tells are the treatment of the 'at least the next several quarters' clause, any change in the bill share of issuance, and the buyback and maturity-profile detail in the accompanying documents. Follow-ons are the auction sizes themselves across the following week and how the belly versus the long bond absorbs them.