US Treasury Ramps Up $1T Bill Issuance as Long-Rate Pressure Mounts
In brief
- Treasury Secretary Bessent increases T-bill issuance and buys back longer-dated securities to manage 10-year yields above 5%
- T-bills now comprise 22% of US national debt, exceeding Treasury Borrowing Advisory Committee recommendations
- Stablecoin issuers emerge as reliable buyers of short-term debt under the GENIUS Act regulatory framework
- Repo market short-term borrowing costs rise sharply, creating potential fiscal vulnerability
Bessent's Debt Strategy
Bessent's approach relies on two simultaneous moves: ramping up T-bill issuance, which mature in a year or less, while expanding buybacks of longer-dated securities. Average T-bill issuance has exceeded $500 billion per week in recent months, and buybacks of longer-dated 10- to 30-year securities are set to exceed $4 billion starting September 9-10, 2026.
This strategy reflects a narrowing window. T-bills now comprise nearly 22% of total US national debt, exceeding the Treasury Borrowing Advisory Committee's recommended range of 15% to 20%. The underlying math is stark: approximately one-third of all outstanding public debt matures within a single year, requiring continuous new issuance.
The Interest Payment Burden
The fiscal pressure is mounting. Total interest payments on the national debt are projected to exceed $1 trillion in the current fiscal year. That's not a projection of future pain—it's happening now. Short-term borrowing costs in the repo market have risen sharply as of mid-September 2026, a sign that even the shortest-duration securities are getting more expensive.
The biggest risk is simple: if short-term rates spike unexpectedly, the entire debt portfolio gets more expensive to refinance. One-third of debt rolling over annually means any rate shock hits fast.
Stablecoins as Debt Buyers
An unexpected source of demand has emerged. The GENIUS Act, enacted in July 2025, requires stablecoin issuers to back their tokens with 100% reserves held in T-bills with maturities of 93 days or less. That single regulatory mandate has turned companies like Circle and Tether into some of the most reliable buyers of short-term US government debt.
The scale could be significant. Analysts project that if the stablecoin market grows to $2 trillion by 2028, the GENIUS Act could generate between $800 billion and $1 trillion in additional demand for T-bills. That demand matters—it absorbs new issuance and keeps short-term yields from spiking further. But it also creates a structural dependency on stablecoin growth.
