The U.S. Treasury Department has raised its borrowing expectations for the third quarter, expecting it to surpass 1 trillion U.S. dollars.

On Monday, the U.S. Treasury Department stated that due to low cash reserves in early July and an expected decrease in cash inflows over the next few months, it is expected to borrow over $1 trillion in the third quarter of 2025 (July to September). This number is much higher than the previously announced expected value of $554 billion in April. The Treasury Department's latest figure is $1.007 trillion in "net marketable borrowing," which is the net amount that needs to be borrowed after repaying debt that is due to expire. Although this figure is significantly higher than the original expectations, it roughly aligns with the predictions of Wall Street analysts. For example, Deutsche Bank had predicted this figure to be $960 billion, J.P. Morgan estimated it to be $1.087 trillion, and Citigroup forecasted it to be $1.01 trillion. This is the first borrowing plan announced by the Treasury Department after the passage of the "Big and Beautiful" bill on July 4th. This bill raised the total borrowing limit of the Treasury Department by $5 trillion, allowing the department to issue new bonds for funding. Prior to this, due to the debt ceiling restrictions, the Treasury Department mainly relied on depleting existing cash reserves to maintain government operations. As of July 3rd, the U.S. government's cash reserve was only $313 billion, less than half of what it was at the same time last year, which explains why the Treasury Department needed to raise the borrowing expectation by $453 billion in just a few months. The Treasury Department also expects that net borrowing in the fourth quarter of 2025 (October to December) will reach $590 billion, lower than the third quarter but still at a historical high. This massive financing demand highlights the dual pressure faced by the U.S. government in repaying existing debt and maintaining fiscal spending. What used to be routine "financing announcements" have now become highly anticipated events on Wall Street, even jokingly referred to as the "Super Bowl for Treasury Department strategists." Ever since former Secretary of the Treasury Yellen unexpectedly announced a significant increase in borrowing size in 2023, leading to a surge in yields on the 10-year and 30-year Treasury bonds, each financing announcement has been a market-moving event. On Wednesday this week, the Treasury Department will announce the detailed structure and arrangement of this round of borrowing, including the issuance timing and distribution of various types of Treasury bonds. This detail will deeply affect the trend of the bond market. It is widely expected that the Treasury Department will maintain the issuance of long-term bonds (such as 10-year, 20-year, and 30-year bonds) while increasing the sale of short-term Treasury bills. While this may help avoid locking in current high rates for long-term debt, it also means that the government faces greater short-term interest rate volatility. If inflation or the federal funds rate rise again, the market will demand higher returns, thereby increasing the government's borrowing costs. On the other hand, maintaining stable issuance of long-term debt helps the Treasury Department "buy time" to wait for future rate cuts by the Federal Reserve before issuing new bonds, thus locking in lower financing costs. However, there is uncertainty as even if the Federal Reserve cuts rates, long-term rates may not necessarily drop at the same time, and the government may still face high financing expenses. The tax cuts pushed by the Trump administration mean a decrease in federal government revenue, posing long-term pressure on fiscal income. Although recent tariff revenue has increased significantly (June tariff revenue was $27 billion, a 302% increase year-on-year), partially alleviating fiscal pressure, the sustainability of high tariff revenue is still questionable due to the ongoing changes in trade agreements.