According to Woofun AI, Citigroup Inc (NYSE: C) predicts that the US Treasury will reduce issuance by US$3 billion in each round of 20-year and 30-year bond auctions, shifting instead to short-term Treasury bills for funding, and may even cancel the 20-year bond entirely, with a related announcement expected on November 4. Market data reveals the dynamics behind this strategy.
On October 9, the 10-year US Treasury yield stood at 5.24%, while the 30-year reached 5.60%; on October 1, the 10-year yield hit its highest level since 2002, and on the same day the US Treasury used its full US$6 billion buyback allowance to repay long-term debt.
Although US Treasury Secretary Scott Bessent issued a challenge to traders in September to take control of the situation, yields continued to climb. Data compiled by Woofun AI shows that on October 9, the 3-month Treasury bill yield was only 4.25%, far below long-term borrowing costs, prompting Citigroup Inc (NYSE: C) to forecast that the Treasury will further reduce long-term bond issuance.
Macro debt pressure and expert skepticism coexist. As of August, the national debt exceeded US$40 trillion, with annual interest expenses reaching US$1.1 trillion. Strategists at BNP Paribas (EPA: BNP) believe this move cannot lower borrowing costs, and Kevin Flanagan, head of investment strategy at WisdomTree Inc (NYSE: WT), also questioned its feasibility in August. Bloomberg cited his remarks noting that from a mathematical standpoint, it is extremely difficult to fill the gap while reducing long-term bond issuance.
The crypto market's knock-on effects are emerging. When the 10-year US Treasury yield hit a 2002 high, the Bitcoin price fell, currently trading at US$84,030, up 1.2% within 24 hours, mainly influenced by the latest remarks from US President Trump.
Next week, the US Treasury's survey of bond dealers and the refunding plan to be released on November 4 will reveal whether Washington chooses shorter-term financing, as well as the subsequent direction of long-term bond yields.