Citigroup expects the US Treasury to cut $3 billion from each 20-year and 30-year bond auction and borrow more through short-term bills instead. Citi said the 20-year bond could even be canceled, with an announcement expected November 4.
The Treasury has not confirmed any change. Bills cost less today, but they mature within a year, so the government must refinance them far more often at whatever rate investors demand.
Why Is the Treasury Shrinking Its Long-Term Debt Sales?
Long-term borrowing costs sit near multi-decade highs. The 10-year yield closed at 5.24% on October 9 and the 30-year at 5.60%, according to Treasury data.
On October 1, the 10-year touched its highest level since April 2002. That same day, the Treasury used its full $6 billion bond buyback limit to retire older long-term debt.
Treasury Secretary Scott Bessent had already challenged bond traders in September.
“I am the house now. … You can bet against me if you want,” he said.
Yields kept rising regardless. Selling fewer long bonds is Citi’s forecast for his next step, according to Bloomberg.
What Shorter Borrowing Means for Interest Costs and Crypto
Bills are cheaper for now. The 3-month yield stood at 4.25% on October 9, well below the 30-year rate.
However, the national debt passed $40 trillion in August, and interest already costs about $1.1 trillion a year, according Treasury figures.
BNP Paribas strategists doubt the shift would lower government borrowing costs. Kevin Flanagan, head of investment strategy at WisdomTree, questioned the math in August.
“It seems to me mathematically very difficult to cut issuance at the longer end of the curve and make it up elsewhere,” Bloomberg reported, citing Flanagan.
Crypto traders have felt the yield climb already. Bitcoin (BTC) cooled when the 10-year hit its 2002-level high and now trades at $84,030, up 1.2% in 24 hours, moved by US President Trump’s latest remarks.
The next signal arrives with a Treasury survey of bond dealers next week. The November 4 refunding statement will then show whether Washington borrows shorter, and how long-term yields respond.
