28-07-2025
U.S. Treasury says it will borrow $1-trillion in third quarter to rebuild cash balance
The U.S. Treasury said on Monday it expects to borrow US$1.007-trillion in the third quarter partly to replenish its cash balance that dwindled during the latest debt ceiling episode.
The figure was US$453-billion higher than its April estimate primarily due to the lower beginning-of-quarter cash balance and projected lower net cash flows. The third-quarter financing projection assumes cash of US$850-billion at the end of September for the Treasury, the department said in a statement.
Much higher borrowing in the third quarter were needed to rebuild the Treasury's cash balance following President Donald Trump's tax and spending bill being signed into law on July 4. The debt ceiling increased by US$5-trillion to US$41.1-trillion following the spending legislations enactment.
The Treasury's cash had dropped to US$313-billion on July 3, data from money market research firm Wrightson ICAP showed.
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'These [financing estimates] are in line with our projections and should not be a surprise to the markets since the increased financing need is almost all due to the shortfall in cash balances on September 30, which was a function of the debt limit,' said Kim Rupert, managing director, global fixed income analysis at Action Economics,
The Treasury also said it expects to borrow US$590-billion in the fourth quarter, as it projects a cash balance of US$850-billion at the end of December.
In the second quarter, the Treasury said it borrowed US$65-billion in privately-held marketable debt, ending the period with a cash balance of US$457-billion. In April, Treasury had estimated borrowings of US$514-billion and assumed an end-of-June cash balance of US$850-billion.
The Treasury will unveil details of it borrowing estimates for the quarter on Wednesday when it announces its financing plans. It is widely expected that the Treasury will maintain current auction sizes for notes and bonds and will likely keep them steady for some time.
Investors will be looking for guidance as to how long the Treasury can hold off not raising the size of the debt auctions used to fund the ballooning U.S. budget deficit.
