News from the Quarterly Treasury Refunding Statement
Last Updated February 20, 2025
About a month after each quarter begins, the U.S. Department of the Treasury releases several publications containing information on historical and future borrowing activities. Those publications provide valuable insights into the nation’s fiscal situation, including how much the government expects to borrow, the composition of Treasury debt, and factors influencing the Treasury’s decision-making.
Quarterly Treasury Borrowing Estimates
According to the guidance released for the second quarter of Fiscal Year 2025 (January-March), the Treasury anticipates borrowing $938 billion in the upcoming six months, which would be $44 billion less than it issued during the same period last year. The Treasury expects borrowing behavior to remain relatively consistent with the previous year’s activity, however, the estimates assume that the debt limit is not a constraint. While extraordinary measures are in place (as they are now), more variability may be seen in borrowing patterns for cash-management bills and other securities.
Looking back, the U.S. government has borrowed $2.3 trillion over the past 12 months. If the Treasury’s expectations about the next two quarters prove accurate, the U.S. government will have borrowed more than $500 billion in eight of the last 10 quarters after doing so only six times in the prior two decades.
Short-Term Securities Have Been Slightly Higher as a Share of Treasury Borrowing Since the Middle of 2023
As borrowing has risen, the Treasury has generally been increasing the proportion of bills (maturity of one year or less) in its portfolio of marketable securities. That pattern reflects, in part, the response to economic disruptions necessitating rapid borrowing:
- From May 2015 through February 2020, bills as a share of outstanding debt generally hovered between 10 and 15 percent, with very few sudden fluctuations. In October 2015, bills as a percentage of the Treasury’s outstanding securities were less than 10 percent, a multi-decade low.
- In February 2020, the pandemic drove unprecedented borrowing needs, and the proportion of bills jumped to 22 percent by April 2020. The total supply of bills doubled in one year, and the share remained above 20 percent until June 2021.
- From August 2021 to June 2023, the percentage of bills receded from the pandemic peak and sat between 15 and 18 percent.
- After the Fiscal Responsibility Act was enacted, which included a temporary suspension of the debt ceiling, the issuance of bills rose again to replenish Treasury’s cash reserves (which had been depleted during the debt limit impasse). The proportion of bills exceeded 20 percent in September 2023 and remains above that level today.
Treasury Borrowing Insights
One of the documents released quarterly is a report compiled by the Treasury Borrowing Advisory Committee (TBAC), which highlights significant changes in Treasury borrowing and outlines trends. Some interesting areas to note:
- Since June 2023, the Treasury has been issuing a 6-week cash management bill to meet short-term financing needs, in addition to its regularly scheduled bill issuances. In April 2024, the TBAC formally recommended that the 6-week issuances become part of the regular auction cycle and is now transitioning to that status.
- All Treasury trading counterparties, known as primary dealers, expect quantitative tightening to conclude by the end of 2025.
- The TBAC cited the risks of debt limit constraints inhibiting “the efficient funding of the government at the lowest possible cost to the taxpayer.” Debt limit brinksmanship and impasses cause economic uncertainty, affect financial markets, and could lead to credit downgrades.
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