The U.S. Treasury Department has increased its borrowing estimate for the July-through-September quarter by $68 billion to $739 billion. This adjustment reflects weaker projected net cash flows as the government prepares to borrow over $1.3 trillion in the second half of 2026.
For the October-through-December quarter, Treasury anticipates borrowing an additional $628 billion in privately held net marketable debt, assuming a year-end cash balance of $850 billion.
The third-quarter borrowing projection is based on an assumption of holding $950 billion in cash at the end of September. The $739 billion estimate is an increase from the $671 billion projected in May, primarily due to lower expected net cash flows, partially offset by a higher-than-anticipated cash balance at the start of the quarter.
Excluding the impact of the increased beginning cash balance, Treasury's current borrowing estimate is $87 billion higher than the May projection.
This increased financing requirement coincides with Treasury's plan to maintain unchanged auction sizes for nominal coupon and floating-rate notes for at least the next several quarters. The department has indicated that current auction sizes offer sufficient capacity to adapt to changes in the fiscal outlook and the Federal Reserve’s System Open Market Account portfolio.
Treasury is closely monitoring private-sector demand for bills and Federal Reserve purchases of Treasury bills, while also assessing whether future adjustments to coupon and floating-rate note issuance might be necessary.
As part of its August refunding, Treasury will sell $125 billion of securities to refinance approximately $96.3 billion of privately held notes and bonds maturing on August 15. These transactions are expected to generate about $28.7 billion in new cash from private investors.
The package includes $58 billion of three-year notes maturing August 15, 2029; $42 billion of 10-year notes maturing August 15, 2036; and $25 billion of 30-year bonds maturing August 15, 2056.
The auctions are scheduled as follows: three-year notes on Tuesday, August 11; 10-year notes on Wednesday; and 30-year bonds on Thursday. All auctions are set for 1 p.m. EDT, with settlement on August 17.
Treasury plans to meet its remaining quarterly financing needs through weekly bill sales, cash-management bills, and regularly scheduled auctions of notes, bonds, Treasury Inflation-Protected Securities (TIPS), and two-year floating-rate notes.
Bill issuance will be the primary method for managing short-term fluctuations in financing needs. Treasury expects to keep current benchmark bill auction sizes stable in the coming weeks and may issue a short-dated cash-management bill around the end of August.
The department anticipates that corporate and non-withheld tax receipts in mid-September will allow for reductions in shorter-dated bill auction sizes for that month. Auction sizes across the bill curve are expected to increase again in October due to rising seasonal government outflows.
Treasury will maintain its planned TIPS auction sizes from August through October. The schedule includes 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 see a significant increase during this period. While Treasury assumes a Treasury General Account balance of $950 billion at the end of September, it projects this account could peak at approximately $1.05 trillion, with a potential variation of $50 billion, in late October due to anticipated large outflows.
Treasury is also continuing its debt-buyback program. During the upcoming refunding quarter, the department expects to purchase up to $38 billion of older, off-the-run securities to support market liquidity, and up to $25 billion of securities in the one-month-to-two-year maturity range for cash-management purposes.
The larger third-quarter financing projection follows a period of comparatively modest borrowing in the April-through-June quarter. Treasury borrowed $190 billion in privately held net marketable debt and concluded June with $919 billion in cash.
Treasury had projected $189 billion of borrowing and a $900 billion quarter-end cash balance in May. After accounting for the higher cash balance, actual second-quarter borrowing was $18 billion below the earlier estimate.
