US government expected to issue $1T in short-term debt as borrowing costs rise

The US government is leaning harder than ever on short-term borrowing to fund a roughly $2 trillion annual budget deficit, with Treasury bill issuance expected to hit $1 trillion as Secretary Scott Bessent tries to keep a lid on long-term interest rates that have surged to levels not seen in nearly two decades. The 10-year Treasury yield climbed past 5% in mid-September 2026, its highest point in 19 years. Bessent’s answer: flood the market with short-term bills instead. The Treasury Twist Bessent’s strategy has been nicknamed the “Treasury Twist,” and the Treasury is ramping up issuance of T-bills, which mature in a year or less, while simultaneously expanding buybacks of longer-dated 10- to 30-year securities. Buybacks of those longer maturities are set to exceed $4 billion starting September 9-10, 2026. T-bills now make up nearly 22% of total US national debt, which recently surpassed $40 trillion. The Treasury Borrowing Advisory Committee, the group of market participants that advises the government on debt management, has long recommended keeping that share between 15% and 20%. The government has blown past the upper bound. Average T-bill issuance has exceeded $500 billion per...