The Treasury Department has revised its borrowing forecast for Q4, lowering it to $776B which is raising concerns.

The estimated federal borrowing in the fourth quarter by the U.S. Treasury Department has been revised down to $776 billion from the previously predicted $852 billion. This decrease comes as a relief to investors who have been concerned about the growing fiscal deficit. However, even with this reduction, the projected borrowing amount for the fourth quarter remains at an unprecedented level. One reason for this surprising decrease is the significant deferred tax receipts from states like California, which have received extensions due to natural disasters. These tax receipts have influenced the overall borrowing projection and provide a positive aspect to the fiscal situation. Treasury officials have acknowledged that their current auction schedule is not sufficient to meet financing needs and emphasize the need for a comprehensive approach to address the funding gap in the future. As the Treasury works to tackle the challenges of the doubled federal deficit in the past fiscal year, investors are eagerly awaiting the revised issuance plans set to be released on Wednesday. Despite the lower borrowing estimate, the bond market did not rally as expected, with 10-year benchmark yields rising by 4 basis points to 4.88% and 30-year Treasury yields increasing by 2 basis points to 5.04%. The iShares 20+ Year Treasury Bond ETF experienced a 0.4% decrease in value.