US Rates: See you next (fiscal) year

The August Treasury refunding announcement maintains current coupon auction sizes while subtly shifting forward guidance from "potential future increases" to "potential future changes," reflecting a more flexible approach to debt management. Anticipated funding gaps in 2027 and 2028 have prompted a six-month delay in planned coupon issuance increases, shifting greater reliance onto T-bills, which are now projected to comprise 25% of total marketable debt by 2028. While the Treasury is evaluating the potential to invest excess cash into repo markets, significant operational hurdles and inconsistent benefits across reserve regimes suggest this remains a long-term consideration rather than an immediate policy shift. These adjustments aim to stabilize long-term rates amidst shifting geopolitical and fiscal pressures, including the impact of coordinated currency interventions and evolving global demand for Treasury securities.