BESSENT’s debt management team has repeatedly rejected Wall Street and the
Treasury Borrowing Advisory Committee (TBAC) requests to drop forward guidance
in the Treasury’s future bond issuance plan, and many dealers now no longer
expect a near-term policy change. Ahead of Wednesday’s quarterly debt strategy
statement, most market participants expect the Treasury to reaffirm it will “not
increase note and bond sizes for at least the next few quarters.” The guidance
dates to the Biden administration; BESSENT previously criticized it as aimed at
lowering long-term borrowing costs before the 2024 election. With midterms
approaching, Republican officials also prefer to avoid signals that could expand
auctions and push yields higher. RBC Capital Markets US rates strategist Blake
Gwinn said Treasury should preserve optionality: modifying the guidance could
lift yields, but the later the change, the larger the potential market impact.
