Citi expects the Treasury to cut long-bond sales next month

Citigroup has told clients it expects the US Treasury to reduce the size of its long-dated bond auctions, and says Treasury Secretary Scott Bessent could go further and cancel issuance of the 20-year bond^2,3. Bloomberg reported the same call, saying Bessent will likely cut long bond sales next month¹. Citi’s trimming of the auctions is described as the bank’s base case³.

Any change would be announced at the Treasury Department’s next quarterly refunding announcement, on 4 November¹. None of the reports puts a figure on how much the auctions would shrink, and none of them says the Treasury has decided anything^1,2,3. This is a bank’s forecast and the coverage of it, not a statement from the department.

Why it matters to investors

Auction sizes at the long end are where the Treasury decides how much duration the market has to absorb, so the size of each sale is a supply decision as much as a financing one. Demand at that end of the curve has been firm in the last few days: one market report describes US bond yields falling as investors moved into 30-year Treasuries⁵.

What happens next is contested among the banks. Deutsche Bank has told clients that the bearish bond narrative has gone too far⁴. A market commentary published the same day argues that the bond selloff is running out of forced sellers⁶.

Monetary policy is pulling the other way. The report on the move into 30-year paper records Federal Reserve Governor Christopher Waller speaking on Thursday of further interest rate increases, in a passage the excerpt cuts off⁵.

What to watch

The date is 4 November, when the refunding announcement would carry any change in auction sizes¹. Two questions sit inside it: whether the long end is trimmed at all, and whether the 20-year bond survives as a separate line, which Citi says is at risk^2,3.

The duration question is not only an American one. The same commentary that sees the selloff running out of forced sellers places the United Kingdom in the same wider duration story for different reasons, with that market caught between the Bank of England, energy and fiscal pressures⁶.

Until 4 November, the gap between Citi’s forecast and Deutsche Bank’s reading of the market is the thing to hold in view, because the two banks are describing the same long end and reaching opposite conclusions about it^3,4.