Key facts
- Treasury attributed the $10 billion cut to a higher starting cash balance, partly offset by lower projected net cash flows.
- Excluding the larger cash cushion, Treasury said borrowing needs were $24 billion above the August estimate.
- Treasury assumed a cash balance of $850 billion at the end of December.
- Treasury projected first-quarter 2027 borrowing of $800 billion on a $1 trillion end-of-March cash balance.
- Treasury said it borrowed $742 billion in the third quarter and ended September with a $984 billion cash balance.
- Treasury said it increased longer-dated buybacks to a maximum of $6 billion per operation from $2 billion.
The US Treasury said on November 2 it expects to borrow $618 billion in the fourth quarter, $10 billion below its August projection, it said. It attributed the reduction to a higher-than-assumed starting cash balance, partly offset by lower projected net cash flows.
Excluding the benefit of that larger opening cushion, borrowing needs came in $24 billion above the August estimate. Treasury said it assumed a cash balance of $850 billion at the end of December.
For the first quarter of 2027, Treasury projected borrowing of $800 billion, based on an end-of-March cash balance of $1 trillion.
In the third quarter, Treasury said it borrowed $742 billion and ended September with a cash balance of $984 billion. That was above its August projection of $739 billion but $30 billion less than expected when excluding the higher-than-assumed end-of-quarter cash balance, it said.
Treasury is due to detail its refunding plans on Wednesday, with traders watching for any indication it plans to change auction sizes in coming quarters. In August, the government said it continued to evaluate potential future changes to its coupon and floating-rate auction sizes, a shift in language from its May refunding announcement, which noted potential future increases to the debt sales.
That shift raised speculation that Treasury may eventually cut the size of some longer-dated auctions and rely more heavily on Treasury bills and short- and intermediate-dated coupons. Analysts see the 20- and 30-year auctions as the most likely to be reduced, with coupon increases concentrated in the 2- to 7-year sector, though they are divided on whether benchmark 10-year note auctions could also grow, according to the report.
Traders will also watch for changes to Treasury's buybacks, which are meant to support market liquidity. The report said Treasury has increased its longer-dated buybacks to a maximum of $6 billion per operation from $2 billion.