US Treasury Keeps Coupon Sizes in $125bn Refunding, Rewords Its Forward Guidance

By The Edge Research Team

The US Treasury will auction $125 billion of notes and bonds from 9 November and has dropped “at least” from its guidance on keeping coupon sizes unchanged for several quarters.

For investors in Treasuries, this quarter’s supply does not change: the three refunding auctions repeat August’s sizes, and scheduled coupon and floating rate note auctions again total $1,040 billion over three months. What changed is the language, the 7-year note’s cycle from March 2027 and the buyback ceiling, and the Treasury Borrowing Advisory Committee, which met on 3 November, now says larger coupon auctions will be warranted later in fiscal 2027. In The Edge’s reading, dropping “at least” removes the stated minimum but keeps the expectation of unchanged sizes for several quarters.

Assistant Secretary for Financial Markets Hunter McMaster’s statement says the US Department of the Treasury anticipates maintaining nominal coupon and floating rate note auction sizes for the next several quarters, based on current projected borrowing needs. The 5 August statement of Deputy Assistant Secretary for Federal Finance Brian Smith put it as “at least” the next several quarters, on the same basis. The statement names no date and no size for any change. The statement also adds that Treasury will engage with a variety of market participants on supply and demand, and that any change will be guided by financing the government at the lowest cost over time.

Three auctions refund $97 billion and add $28 billion of new cash

Treasury puts the private holdings maturing on 15 November, a Sunday, at approximately $97 billion, and says the offering raises approximately $28 billion of new cash from private investors. In August the same three sizes refunded approximately $96.3 billion and raised approximately $28.7 billion.

On the printed figures, new cash is 22.4% of this offering, against 23.0% in August. Treasury’s August table shows the same three sizes for May, so the offering is unchanged across the May, August and November refundings.

Refunding auctions (sizes in $ billions)

The notes mature on 15 November 2029 and 2036 and the bond on 15 November 2056. Auctions take place at 1:00 p.m. ET (18:00 GMT); settlement is Monday 16 November for all three.

Every size for November to January matches the same month of the August to October table. The statement’s table prints the 10-year, 20-year and 30-year sizes $3 billion higher in November than in December or January. The floating rate note rises from $28 billion to $30 billion in January, as it did in October.

Nominal coupon and FRN auction sizes (in $ billions)

Sizes are as printed in the statement’s table; totals are sums of the eight lines. The August to October table carries the same figures and the same totals, month for month.

Nominal coupons alone total $954 billion over the three months and the floating rate notes $86 billion. The 2-year to 10-year auctions, the sector where the committee’s minutes say any added issuance should be concentrated, supply $843 billion of the coupons, or 88.4%.

The long end carries the rest: the 20-year and 30-year auctions together add $111 billion, 11.6% of nominal coupons. The minutes record a meaningful discussion of potential future changes to 20-year and 30-year issuance.

Treasury plans to convert the 7-year note from a monthly new issue to a quarterly new issue with two reopenings, similar to the 10-year note. New 7-year notes will be auctioned in March, June, September and December, with reopenings in the two months after each. The first quarterly new issue is March 2027, reopened in April and May.

The note keeps its end-of-month auction timing, and it will continue to issue and mature at month end. The statement gives no size for the new cycle; the monthly size in every month of the November to January table is $44 billion.

The number of 7-year auctions stays at three a quarter, one new issue and two reopenings in place of three new issues. By The Edge’s count, that would create four new 7-year securities a year instead of twelve.

Bills, TIPS, cash and buybacks carry the quarter’s swings

Treasury says it continues to see strong demand for bills from a broad range of market participants. It expects to keep benchmark bill sizes where they are into late November and anticipates potentially issuing a short-dated cash management bill around the end of that month.

Given projected receipts from the mid-December corporate and non-withheld tax date, it expects to cut shorter-dated bill auction sizes during December, then raise sizes across the bill curve in January on expected seasonal outflows. The August statement set out the same sequence a quarter earlier: a possible cash management bill around the end of August, reductions in September and increases in October.

TIPS auction sizes (in $ billions)

The statement keeps TIPS auction sizes at current levels. The three auctions total $64 billion.

Treasury assumes a cash balance of $850 billion at the end of December, the same figure it carried for that date in its 2 November borrowing estimates, set out earlier on The Edge. It estimates the Treasury General Account could peak at $1.025 trillion, plus or minus $50 billion, in late November and again in late January.

That peak is 2.4% below the $1.05 trillion projected in August for late October. With the stated margin, the range runs from $975 billion to $1.075 trillion.

Treasury says the figures follow its long-standing cash balance policy and are driven by the large outflows expected at those times. The committee’s report puts the balance at approximately $850 billion at the end of the first quarter of fiscal 2027 and $1 trillion at the end of the second, which are the end-December and end-March figures.

Treasury anticipates buying up to $70 billion of off-the-run securities across buckets for liquidity support over the quarter, and up to $25 billion in the 1-month to 2-year bucket for cash management. In August the ceilings were $38 billion and $25 billion.

The liquidity support ceiling is therefore $32 billion higher, a rise of 84.2%. The cash management ceiling is unchanged, so the two together are 50.8% higher, at $95 billion.

Buyback ceilings (in $ billions)

Ceilings are the “up to” amounts in each statement; totals are sums.

The committee’s minutes record that Treasury announced larger liquidity support operations on 19 August for the 10-year to 20-year and 20-year to 30-year sectors, a change set out earlier on The Edge. Most primary dealers told Treasury they saw at least modest improvements in liquidity and market functioning, citing a more dependable outlet for off-the-run securities, though the effect on dealers’ ability to handle client flows was mixed.

Treasury says it will keep evaluating possible enhancements: maximum purchase amounts, scheduling and frequency, security eligibility and the execution process. Dealers asked for clearer and earlier communication, broader distribution of purchases through per-CUSIP limits, and smaller, more frequent operations. The committee judged that buybacks remain an effective tool for liquidity since their introduction in 2024, but that any management of the maturity profile should come through auction sizes.

The committee points to larger auctions later in fiscal 2027

The committee unanimously recommended unchanged nominal coupon, floating rate note and TIPS sizes this quarter, and also recommended that Treasury consider adjusting its forward guidance. It told Treasury that increases in coupon auction sizes would likely be appropriate in the second half of fiscal 2027. Its report dates the first fiscal quarter of 2027 as ending in December, so that half runs from April to September 2027.

In August the committee judged that projections could warrant larger coupon issuance in fiscal 2027, and recommended that Treasury consider updating its guidance to preserve flexibility. The November report is firmer: increases will be warranted later in the year, and there is broad agreement on raising auction sizes. The committee asked in August for Treasury to consider updating its guidance and repeated the request in November; the 4 November statement drops “at least” without saying whether the two are linked.

The debate is over how, not whether: the report records broad agreement on raising coupon sizes and considerable debate on the pace and sizing at the long end.

Members generally agreed that additional issuance should be concentrated in the 2-year to 10-year sector. Primary dealers overwhelmingly expected the eventual increases in short and intermediate tenors, and several repeated their view that Treasury should consider a 1-year floating rate note indexed to SOFR. The committee agreed that SOFR-indexed floating rate notes were worth exploring and suggested considering several tenors.

Funding gap estimates the minutes carry

The minutes’ summary of Treasury’s debt office says current issuance sizes leave a modest FY2027 shortfall that bills could likely manage. For FY2028 to 2029, the median primary dealer forecast of net marketable borrowing from private investors implies a $2.14 trillion shortfall against current coupon auction sizes and the bill supply in private hands.

Current sizes, the committee said, are likely to shift Treasury’s debt toward a rising share of bills and shorter-term funding. Money market fund assets have levelled off, it noted, and the bill market has started to show some price sensitivity.

The committee ties higher yields to growth, not to weak demand

Since the committee last met in early August, two-year yields rose roughly 50 basis points and ten-year yields roughly 40. The ten-year peaked around 5.4% and the thirty-year around 5.7% in early October, and some of that increase has since reversed.

The committee attributes the rise mainly to stronger activity, the Federal Reserve’s September rate increase and its projections, and persistent energy supply disruptions. Recent auctions remained generally resilient, though individual results varied, and it found no evidence of a persistent deterioration in auction demand.

The first of the committee’s two charges covered borrowing by companies tied to super intelligence, the term its charge uses. Its view is that the technology financing cycle has not crowded out long-end Treasury demand, and any effect on rates comes through stronger growth. Members stressed that the cycle is early and asked Treasury to keep monitoring it.

On derivatives, the committee said futures and swaps broaden demand for Treasuries, and it listed options to support cash Treasury demand, among them easing balance sheet constraints and expanding repo access.

What to watch: the 3-year, 10-year and 30-year auctions on 9, 10 and 12 November, each at 1:00 p.m. ET (18:00 GMT), settling on 16 November. A possible short-dated cash management bill around the end of November, and cuts to shorter-dated bill auction sizes during December. The next refunding announcement on 3 February 2027. The first quarterly 7-year note new issue in March 2027.

Figures are from the US Department of the Treasury’s Quarterly Refunding Statement of 4 November 2026, set against its statement of 5 August 2026, its borrowing estimates of 2 November and the reports and minutes of the Treasury Borrowing Advisory Committee for 3 November and 4 August; totals, shares and changes not attributed to a source are The Edge’s calculations.

Sources: US Department of the Treasury, Treasury Borrowing Advisory Committee, The Edge.

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