The median primary dealer expects the federal government to face a $2.14 trillion funding shortfall across fiscal 2028 and fiscal 2029 if Treasury holds coupon auction sizes at current levels. That projection appears in the minutes of the November 3 meeting of the Treasury Borrowing Advisory Committee, published by the Treasury Department on November 4 alongside the committee’s report to the Secretary and the quarterly refunding statement. The committee, a standing panel of dealers and investors that advises Treasury on debt management, unanimously recommended leaving coupon, floating rate note, and TIPS auction sizes unchanged this quarter, while judging that increases “would likely be appropriate in the second half of FY2027.” Treasury took the first half of that advice and said it anticipates maintaining nominal coupon and FRN auction sizes for the next several quarters. The number matters because it is the arithmetic behind every future auction calendar. Federal debt stood at $40.556 trillion on November 5, and interest expense reached $1.36 trillion in fiscal 2026. Covering a shortfall that size means larger note and bond sales, heavier reliance on bills, or both, and the mix decides where along the Treasury yield curve the pressure lands. The current prime rate and mortgage pricing follow from there. The first test comes Monday, with a $58 billion 3-year note auction.
- The median primary dealer projects a $2.14 trillion funding shortfall across fiscal 2028 and 2029 at current coupon sizes.
- Treasury’s borrowing committee unanimously recommended holding coupon, FRN, and TIPS auction sizes unchanged this quarter.
- Treasury says it anticipates maintaining nominal coupon and FRN auction sizes for the next several quarters.
- Up to $95 billion of buybacks is scheduled this quarter, $70 billion for liquidity and $25 billion for cash management.
- The November refunding totals $125 billion and opens with a $58 billion 3-year note on November 9.
What the Borrowing Committee Told Treasury
The committee met on November 3 with all members present, and chair Jason Granet certified the minutes the same day. Treasury put four charge questions to the panel, among them the fiscal outlook and the composition of this quarter’s financing, which refunds approximately $97 billion of privately held notes and bonds maturing on November 15. On the last question the committee “unanimously recommended that Treasury maintain nominal coupon, FRN, and TIPS auction sizes at current levels but also consider adjusting its forward guidance language.” Members generally agreed that additional issuance should concentrate in the 2-year to 10-year sector, and held what the minutes call a meaningful discussion about potential future changes to 20-year and 30-year issuance. Dealers reported mixed views about demand for longer-dated securities from the pension and insurance buyers who normally anchor the long end.
The committee’s separate report to the Secretary, signed by Granet and vice chair E. Alexander Schiller, recommended keeping sizes unchanged for the current quarter while stating that “increases in coupon auction sizes will be warranted later in FY27.” The report describes “broad agreement across the Committee to increase coupon auction sizes” but notes “considerable debate around the pace and sizing specific to the long end of the curve.” It also flags the cost of waiting: current auction sizes “are likely to shift Treasury’s debt profile toward an increasing share of bill and shorter-term funding,” and the bill market “has started to show some signs of price sensitivity.” Bills have absorbed heavy supply at tight spreads for two years, and the committee is signaling that the absorption is no longer free.
Where the $2.14 Trillion Figure Comes From
The shortfall is not a Treasury forecast. It is the median of the primary dealers’ own projections of what the government would still need to raise in fiscal 2028 and fiscal 2029 if coupon auction sizes and privately held bill supply stayed where they are now. For fiscal 2027 the minutes describe only a modest shortfall, which is why the committee saw no case for raising sizes this quarter.
The revenue and spending detail in the minutes shows why. Withheld taxes ran $159 billion higher, a 5% gain, and non-withheld receipts rose $103 billion, or 9%. Gross corporate taxes fell $43 billion, or 9%, and corporate refunds jumped $27 billion, a 79% increase. Treasury Department outlays rose $122 billion, or 8%, on higher gross interest. Treasury’s own accounting puts interest expense at $1.3604 trillion for fiscal 2026 and $115.5 billion in October alone. The average rate on all interest-bearing debt reached 3.580% on October 31, with bills averaging 4.014%, and the national debt at $40.556 trillion on November 5.
Treasury’s Answer This Quarter Is $95 Billion in Buybacks
Rather than raise auction sizes, Treasury leaned on repurchases. The November 4 refunding statement says Treasury “will purchase up to $70 billion in off-the-run securities across buckets for liquidity support” and “up to $25 billion in the 1-month to 2-year maturity bucket for cash management purposes.” The tentative schedule published the same day lists 18 liquidity operations, most of them $6 billion each in the 10-year to 20-year and 20-year to 30-year buckets, plus $4 billion operations across the shorter nominal buckets and three smaller TIPS operations. The two cash management operations are $12.5 billion each, on December 3 and December 17, both in the 1-month to 2-year bucket.
Buybacks relieve pressure in specific maturities without adding net borrowing capacity, and the committee was explicit about it. Its report says buybacks “remain an effective tool” for liquidity support, then adds that “any management of Treasury’s maturity profile should be done via changes to auction sizes.” Dealers told the panel they had seen “at least modest improvements in liquidity and market functioning” from the larger liquidity-support operations announced on August 19, and several asked for smaller, more frequent operations with per-CUSIP limits. The long end still shows the strain. On November 5 the 20-year yield closed at 5.27%, above the 30-year at 5.25%, an inversion that reflects thin demand for the 20-year point rather than any view on growth.
What This Means for Your Rates
Treasury’s issuance mix and the Fed’s policy rate reach consumers through two different channels. The prime rate sits at 7.00%, pinned to a federal funds target range of 3.75% to 4.00%, with the effective rate at 3.88% on November 5. Prime drives variable-rate products, so credit card APRs and home equity lines move within a statement cycle or two of any FOMC change. Treasury borrowing works on the other channel: heavier coupon supply lifts intermediate and long yields, and those yields price fixed-rate loans. The 10-year note closed at 4.84% on November 5, the 2-year at 4.46%, and the 30-year fixed mortgage rate averaged 7.18% that week.
For savers the picture is better. A bill-heavy funding strategy keeps front-end yields elevated, and the 3-month bill yielded 4.17% on November 5. Banks price deposits against that front end, which is why competitive CD rates and the best high-yield savings accounts have held up while long yields slipped. Borrowers face the reverse. Fixed personal loan pricing keys off intermediate Treasury yields plus a credit spread, so the recent dip in the 2-year and 10-year is the part worth watching.
To track whether Treasury is about to raise auction sizes, read the guidance sentence in each quarterly refunding statement rather than the headline dollar figure. Watch whether Treasury “anticipates maintaining” sizes or drops that language. The next statement lands February 3, 2027, with the borrowing committee’s minutes released the same day.
Frequently Asked Questions
How big is the projected Treasury funding gap?
The median primary dealer projects a $2.14 trillion funding shortfall across fiscal 2028 and fiscal 2029 combined, assuming Treasury keeps coupon auction sizes and privately held bill supply at current levels. The figure comes from the Treasury Borrowing Advisory Committee minutes for its November 3, 2026 meeting, published November 4.
How much does the U.S. pay in interest on the national debt?
Treasury’s interest expense on the public debt totaled $1.3604 trillion in fiscal 2026, and October 2026 alone cost $115.5 billion. The driver is the average rate on all interest-bearing debt, which reached 3.580% on October 31, up from 3.531% at the end of September. Bills carry the highest average rate in the marketable mix at 4.014%, against 3.399% for notes and 3.483% for bonds. Each month that maturing low-coupon debt is replaced at current yields pushes the blended rate higher.
How does the U.S. government actually borrow money?
Treasury sells marketable securities at regular public auctions: bills maturing in a year or less, notes from 2 to 10 years, bonds of 20 and 30 years, inflation-protected securities, and floating rate notes. This quarter’s refunding offers $125 billion to refinance about $97 billion of privately held notes and bonds maturing November 15, raising roughly $28 billion of new cash. The schedule is a $58 billion 3-year note on November 9, a $42 billion 10-year on November 10, and a $25 billion 30-year on November 12.
What is the national debt level right now?
Total public debt outstanding was $40.556 trillion on November 5, 2026, according to Treasury’s Debt to the Penny series. That splits into $32.767 trillion held by the public and $7.789 trillion of intragovernmental holdings, the Treasury securities owned by federal trust funds such as Social Security and Medicare. The intragovernmental figure fell about $97 billion between late October and early November, which is routine: trust funds redeem holdings to fund the November 1 benefit payments.
What does a larger funding gap mean for my mortgage rate?
Mortgage rates follow the 10-year Treasury yield plus a spread, so heavier coupon issuance tends to lift them even when the Fed is on hold. The 30-year fixed averaged 7.18% in the week ended November 5, down from 7.40% three weeks earlier as the 10-year fell from 5.09% to 4.84%. If Treasury raises note and bond auction sizes in the second half of fiscal 2027, as the committee expects, that added supply works against further declines. That argues against waiting indefinitely for a lower rate.
Should I lock a savings or CD rate now or wait?
Front-end yields are what matter for deposits, and they remain firm: the 3-month bill paid 4.17% and the 1-year 4.28% on November 5. Treasury expects to cut shorter-dated bill auction sizes in December and raise them again in January, and less bill supply can trim those yields. Locking a term CD fixes your rate against that risk, while a high-yield savings account keeps flexibility if the Fed raises its target again. Splitting the balance is a reasonable middle.
Watching the November Auctions and the February Refunding
Three dates carry the story forward. The $58 billion 3-year note on November 9 and the $42 billion 10-year on November 10 will show whether dealer caution is reaching bid-to-cover ratios. The December 3 buyback is the first cash management operation. The February 3, 2027 refunding statement is where the guidance language either holds or breaks. Track the inputs on the U.S. debt dashboard, the interest rate dashboard, and the Fed rate forecast.
References
- U.S. Department of the Treasury, Minutes of the Meeting of the Treasury Borrowing Advisory Committee, November 3, 2026.
- U.S. Department of the Treasury, Report to the Secretary of the Treasury from the Treasury Borrowing Advisory Committee, November 4, 2026.
- U.S. Department of the Treasury, Quarterly Refunding Statement of Assistant Secretary for Financial Markets Hunter McMaster, November 4, 2026.
- U.S. Department of the Treasury, Tentative Buyback Schedule, Fourth Quarter 2026.
- Treasury Fiscal Data, Debt to the Penny, record date November 5, 2026.
- Treasury Fiscal Data, Interest Expense on the Public Debt Outstanding, October 2026.
- Treasury Fiscal Data, Average Interest Rates on U.S. Treasury Securities, October 31, 2026.
- Federal Reserve Bank of St. Louis, Bank Prime Loan Rate (DPRIME).
- Federal Reserve Bank of St. Louis, Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity (DGS10).
- Federal Reserve Bank of St. Louis, 30-Year Fixed Rate Mortgage Average in the United States (MORTGAGE30US).
