US Treasury auction changes loom in 2027; dealers eye long-end cuts
TLT•Primary dealers expect the Treasury may cut 20-year and 30-year bond auction sizes in 2027 while increasing 2-year to 10-year note issuance. TD Securities forecasts $678 billion in net bill supply from November 2026 to January 2027.
1. Dealers anticipate auction shifts
The US Treasury is widely expected to leave coupon auction sizes unchanged at this week's quarterly refunding announcement, but primary dealers expect possible changes in 2027. They broadly anticipate cuts to 20-year and 30-year bond auctions and increases in 2-year to 10-year note issuance. One strategist said changes would probably not come before August 2027 at the earliest, as the Treasury has said coupon sizes will remain steady for the next several quarters.
2. Bill issuance and deficits
The Treasury is also expected to rely heavily on short-term bill issuance in coming quarters. TD Securities forecasts net bill supply of $678 billion for November 2026 to January 2027; Wells Fargo expects bills to reach 24% of the Treasury market over the medium term, compared with a 15% to 20% range recommended by the Treasury Borrowing Advisory Committee.
3. Borrowing outlook
The fiscal 2026 deficit was $1.992 trillion. J.P. Morgan expects the 2027 deficit to remain at $1.960 trillion, citing limited information about further reconciliation packages or government financing. A Wells Fargo strategist said slower growth and lower energy prices would be needed to bring longer-end yields down.
