Wall Street forecasts the U.S. will net borrow $1 trillion in short-term debt over the coming year, with rising rollover risk.
1 hours ago
Bank of America, JPMorgan Chase, and Goldman Sachs project that the U.S. will net borrow roughly $1 trillion over the next year via short-term Treasury bill issuance. As U.S. long-term Treasury yields hit their highest level since 2007, the Treasury’s growing reliance on short-term debt means its fiscal financing costs have become far more sensitive to interest rate changes. Specifically, Bank of America forecasts net short-term debt borrowing of around $1.07 trillion in the fiscal year ending September 2027; JPMorgan projects full-year 2027 issuance at $1.09 trillion, while Goldman Sachs estimates $961 billion. Per Bank of America’s projections, the U.S. outstanding stock of short-term Treasuries will reach roughly $8 trillion by next September, accounting for 24.3% of all marketable U.S. government debt. Short-term debt typically carries lower financing costs than long-term debt, but requires more frequent rollovers. With the Federal Reserve holding interest rates steady at 3.75% to 4%, the rising share of short-term debt could make U.S. interest payments more large and volatile. The Treasury Borrowing Advisory Committee previously recommended that the share of short-term debt in total outstanding debt be maintained at around 20% over the long term, to balance financing costs, debt volatility, and rollover risks. The U.S. federal deficit remains at elevated levels; the Congressional Budget Office (CBO) projects the deficit will stay at roughly 6% of GDP over the next decade, leaving the Treasury with persistent massive financing needs.
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