JPMorgan strategists say the Treasury will sit tight on its refunding guidance, kicking any real changes to bond issuance down the road until after November's midterms.
The US Treasury is expected to hold its bond auction sizes unchanged in its upcoming quarterly refunding statement, according to JPMorgan strategists. The reasoning is straightforward: don’t rock the boat when voters are about to head to the polls.
JPMorgan’s team, led by strategist Jay Barry, anticipates that the August 2026 refunding announcement will maintain the Treasury’s existing guidance on auction sizes. That means no increases to bond sales, no dramatic language shifts, and certainly nothing that might send long-term yields spiking during a politically sensitive window.
The election factor
The November 2026 refunding announcement is scheduled for just one day after the midterm elections on November 8. By keeping its powder dry until voters have spoken, the Treasury avoids becoming a campaign talking point or, worse, the catalyst for a bond market selloff that lands on the front page of every newspaper in swing districts.
Long-maturity yields have been hovering near their highest levels since President Trump took office. In that environment, even a subtle shift in Treasury guidance, like signaling larger future auctions, could push yields higher still.
JPMorgan’s strategists also note that a proposed adjustment to remove the phrase “at least” from the Treasury’s steady auction size language may be postponed until 2027. The Treasury has been saying it will keep auctions “at least” at current levels, which technically leaves the door open for increases. Removing those two words would signal a firmer commitment to the status quo.
A $3.7 trillion elephant in the room
JPMorgan’s analysis points to a projected funding gap of $3.7 trillion over the next four fiscal years, representing a massive amount of new debt that needs to find willing buyers.
Treasury Secretary Scott Bessent has previously tied bond issuance strategy to prevailing yield levels. That framing gives the department cover to delay changes when yields are elevated, arguing that flooding the market with more supply when prices are already under pressure would be counterproductive.
What this means for investors
For bond market participants, the short-term implication is relatively simple: expect more of the same. No surprises in the August refunding statement means no sudden supply shocks.
The November refunding announcement, scheduled for the day after the midterms, represents the first opportunity for the Treasury to speak more candidly about its issuance plans without electoral considerations. When the Treasury does begin ramping up issuance, possibly in early 2027, the market could face a supply wave that tests investor appetite in ways that a gradual increase would not.
