Some big Wall Street banks are expecting next week’s refunding announcement by the Treasury to reflect the government’s large and ongoing borrowing needs.

JPMorgan Chase JPM, -3.60% and Deutsche Bank DB, estimate that Treasury will need to borrow roughly $1.5 trillion during the current fourth quarter and first quarter of 2024 — on top of the $1 trillion estimated borrowing that took place in the third quarter. Jefferies JEF, -1.68% puts the number closer to $1.4 trillion.

Treasury’s heavy borrowing is one of the most important factors behind the recent, steep run-up in long-term yields, which ended the New York session at their highest levels since 2007 last week. Since July, 10- BX:TMUBMUSD10Y and 30-year yields BX:TMUBMUSD30Y have each jumped by a full percentage point or more as traders fret over the onslaught of supply for Treasurys, the U.S. government’s fiscal trajectory, and the risks of holding long-dated government debt to maturity.

“We do expect the Treasury to be responsive to the recent market move,” said Deutsche Bank strategist Steven Zeng in a note.

Poster Comment:

Treasury is borrowing about $300 billion a month.But is also rewriting old debt that is expiring.