Citigroup sees Bessent as likely to reduce how much the Treasury sells in the long end, and it says 20-year issuance could be axed outright. Jason Williams, the bank's head of US rates strategy, outlined a base case of trimming each 20- and 30-year auction by $3 billion while making up the difference with more bills. In a late Friday note, he told clients that, given the possibility of a "reduction, or perhaps cancellation, of the 20-year bond," 20-year bonds could beat 10-year notes.
Debt issuance decisions move yields across the entire curve. Market Briefs covers Treasury policy free every weekday.
A first clue could show up in the dealer survey due next Friday. Williams called the questionnaire a potential "bullish catalyst" if it asks whether demand at the long end is being "partly cannibalized" by high-quality hyperscaler issuance. He added that while such IG supply has not moved the overall level of rates, pension funds could be favoring long-dated IG bonds more than usual. Williams said that, if Treasury adopts Citi's base case, the news would come at the Nov. 4 quarterly refunding announcement.
Long-dated US borrowing costs have jumped, and the 20-year is currently the highest-yielding tenor. That backdrop is why Wall Street is debating what Bessent might do to try to rein in yields hovering near multi-decade highs. Not everyone is convinced it would work: strategists at BNP Paribas said this week they doubt such a move would bring down government borrowing costs.
For savers and investors, the key takeaway is simple: what Treasury decides at the long end can ripple into mortgage rates, bond funds, and the yield on your cash. Keep an eye on that Nov. 4 update and the dealer survey hints before it.
How much long-dated supply arrives affects every mortgage rate. Join Market Briefs free and follow the auctions.
