Goldman Sachs: Treasury Borrowing Outlook Points to Later Coupon Increases - FJElite

Treasury’s marketable borrowing estimates came in modestly above expectations, with $618bn projected for Q4 2026 and $800bn for Q1 2027. The higher Q1 figure mainly reflects a larger Treasury General Account target of $1tn versus an assumed $900bn.

Nominal coupon, TIPS and FRN auction sizes were left unchanged, but Treasury softened its guidance by removing “at least” from the phrase that current sizes would remain in place for the next several quarters. TBAC also pointed more clearly to potential coupon auction changes in the second half of 2027, shifting expectations for increases to begin around August rather than May.

Treasury remains comfortable with bill demand for now, supported by private-sector demand and SOMA purchases, though some signs of greater price sensitivity are emerging. That suggests any future auction-size increases are more likely to be concentrated in the 2- to 10-year sector, while long-end sizes are expected to stay unchanged, with some risk of modest reductions.