Barclays Sees U.S. Treasury Bond Issuance Holding Steady Into 2026

Barclays Bank’s top interest rate strategist has forecasted that U.S. treasury bond issuance levels will remain flat through the next quarter and into the 2026 fiscal year. Analyst Dhiraj Narula told Jin10 that this expectation aligns with Treasury guidance from recent months, confirming that auction volumes have stabilized since the last increase in early 2024. The projection signals a period of continuity in government borrowing activity as markets adjust to current fiscal realities.

Two Years of Flat Treasury Bond Supply

The treasury bond market has experienced remarkable stability over the past two years following the February-April 2024 increase. Narula stressed that despite this apparent calm on the issuance front, the underlying economic pressures remain severe. America’s annual budget deficit continues to hover near $2 trillion, creating relentless demand for new Treasury securities to finance government spending.

The $2 Trillion Fiscal Challenge

The massive federal deficit presents a paradox: while debt issuance pressures mount, the Treasury has opted to maintain current treasury bond auction sizes rather than expand them dramatically. This conservative approach reflects careful balance between market stability and fiscal necessity. Narula explained that the decision to keep issuance steady manages market expectations and prevents disruption from sudden supply increases, even as the government faces enormous borrowing needs.

Watching for Expansion Signals Ahead

However, the outlook may shift if fiscal conditions deteriorate further. The Treasury signaled in November 2025 that it was “undertaking preliminary assessments” regarding potential treasury bond auction expansions. These discussions hint that larger offerings could emerge if deficit pressures intensify. The next quarterly refinancing announcement—typically the venue for major policy shifts—will likely telegraph whether expansion plans are moving from consideration into implementation.

Market participants will closely monitor this announcement for any hints about the Treasury’s willingness to increase treasury bond supply, which could impact yields and borrowing costs across the economy.