The Treasury Borrowing Advisory Committee (TBAC) recently provided insights into U.S. debt issuance strategies amid rising interest rates and fiscal deficits. The report anticipates a significant increase in debt issuance for October to December 2024, with net issuance of $546 billion, followed by a target of $823 billion for January to March 2025. This reflects a total increase of $277 billion from previous projections. A notable drawdown of the Treasury General Account (TGA), from $886 billion to $700 billion, will require an increase in bill issuance, particularly T-bills, which are forecasted to rise from 13% to 45% of total net issuance. Treasury Secretary Janet Yellen confirmed that there will be no changes in long-duration issuance, placing more emphasis on short-term bills to meet borrowing needs. The TGA balance will reverse back to $850 billion, affecting the overall composition of future debt. This shift in issuance strategy raises concerns about sustainability and market impact as total Treasury debt surpasses long-term targets.

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