U.S. Treasury Sets $125 Billion Quarterly Refunding With Unchanged Coupon Sizes

U.S. Treasury set its quarterly refunding at $125 billion, in line with market expectations. It will sell $58 billion of 3-year notes on May 11, 2026, $42 billion of 10-year notes on May 12, 2026, and $25 billion of 30-year bonds on May 13, 2026.

3 billion. Treasury anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters. It believes its current auction sizes leave it well positioned to address potential changes to the fiscal outlook and to the size and composition of the SOMA portfolio.

Treasury is monitoring SOMA purchases of Treasury bills and growing demand for Treasury bills from the private sector. Treasury continues to evaluate potential future increases to nominal coupon and FRN auction sizes with a focus on trends in structural demand and potential costs and risks of various issuance profiles.

It expects to further increase offering sizes of shorter-dated benchmark bills over the coming weeks.

In late-May 2026, Treasury anticipates issuing a short-dated CMB to meet peak liquidity needs at the end of May due to maturing coupon securities. Treasury expects to implement modest reductions to short-dated bill auction sizes during the month of June 2026. In July 2026, Treasury anticipates incrementally increasing bill auction sizes across the curve.

The department boosted its estimate for net borrowing this quarter amid lower net cash flows. Treasury plans to maintain the 10-year TIPS reopening this May at $19 billion.

Treasury is modifying settlement timing for 20-year bond reopening auctions, with auctions scheduled from June 16, 2026, set to settle on the Friday of the auction week while 20-year new issues will continue to settle at month end. Treasury expects to purchase up to $38 billion in off-the-run securities across buckets for liquidity support.

It expects to purchase up to $25 billion in the 1-month to 2-year maturity bucket for cash management purposes, down from the previous cash management buyback amount of $75 billion in Q1.

Treasury is assuming a $900 billion cash balance at the end of June 2026 and estimates that the size of the Treasury General Account could peak at $1 trillion plus or minus $50 billion in late July 2026. Director Pietrangeli said current issuance sizes are adequate to cover expected borrowing needs for the remainder of FY2026.

3 trillion funding shortfall in FY2027-28 based on current coupon auction sizes and bill supply.

Debt Manager Jensen said dealers generally anticipate that nominal coupon auction sizes might next increase in early CY2027. The TBAC Committee unanimously recommended that Treasury maintain nominal coupon, FRN, and TIPS auction sizes at current levels. TBAC continues to believe that increases in coupon issuance could be warranted in FY2027.

The committee had a healthy debate whether Treasury should consider investing excess cash in the overnight Treasury repo market and agreed that additional study is warranted regarding operational and implementation considerations for investing excess cash in the overnight Treasury repo market.

The TBAC Committee discussed the expansion of central clearing in the Treasury securities market. The share of bills in total debt outstanding increased to roughly 22% from 14% before covid.

The Treasury has used the same forward guidance on coupon sizes since early 2024. The International Monetary Fund cautioned last month that heavy reliance on bills leaves federal debt costs more vulnerable to sudden swings in rates. Treasury yields edged lower after unchanged guidance on auctions.