U.S. Treasury Secretary Scott Bessent said the government will make only gradual adjustments to Treasury debt auction sizes to safeguard stability in the world’s largest bond market. Speaking at the Federal Reserve Bank of New York’s Treasury Markets Conference, Bessent emphasized that strong demand from institutional buyers and money market funds continues to support the Treasury market despite shifting borrowing requirements. He said the Treasury will maintain a “regular and predictable” issuance schedule to keep the market functioning as a benchmark for global financial stability. The remarks reinforced that the department’s approach will remain analytical and transparent, with any issuance changes introduced slowly to minimize disruption. According to Bessent, the Treasury will continue engaging market participants to assess how upcoming adjustments are being received and to ensure that auction demand remains broad and resilient.
Bessent pointed to the rise in demand for Treasury bills driven by money market funds, stablecoin issuers, and banks that have expanded their holdings of government securities. He added that planned regulatory changes to banks’ supplementary leverage ratio are expected to further strengthen demand by easing capital constraints on Treasury holdings. Bessent reiterated that the Treasury does not expect to alter the size of its coupon auctions for several quarters, citing flexibility provided by steady investor appetite and a moderate reduction in the U.S. budget deficit. He also highlighted that the Federal Reserve’s decision to begin reinvesting proceeds from its mortgage-backed securities portfolio into Treasury bills has created additional stability in the short-term funding market. These dynamics, he said, give the Treasury room to meet borrowing needs without abrupt issuance changes.
The policy stance marks a continuation of the Treasury Department’s broader goal to maintain the bond market’s reliability as a core financing tool for the government and as a reference point for global financial assets. Analysts say Bessent’s commitment to gradual adjustments underscores efforts to balance the U.S. government’s borrowing flexibility with investor confidence. With trillions of dollars in debt traded daily, even small shifts in auction volume or schedule can ripple through interest rate markets, affecting yields and global liquidity. The Treasury’s emphasis on predictable issuance reflects lessons learned from past volatility episodes when abrupt shifts unsettled bond investors. By maintaining steady communication and transparency, officials aim to support a stable environment for both domestic and international investors who rely on Treasuries as the world’s benchmark safe asset.
