Debt refinancing

Backstory

On 17 Sep 2026, Treasury's Debt to the Penny data put debt held by the public, the part owed to investors outside the government, near $32.39 trillion. Total public debt was near $40.09 trillion. The Congressional Budget Office (CBO) projects debt held by the public rising from about 101% of GDP, the economy's yearly output, in 2026 to about 120% in 2036, with rising interest costs a main reason deficits grow.

Inflation can make old fixed-rate debt lighter, because it is repaid in dollars that buy less. That is not a clean reset. About $2.15 trillion of Treasury Inflation-Protected Securities (TIPS) and about $0.68 trillion of floating-rate notes were outstanding on 31 Aug 2026, and their payments rise with inflation or rates. If investors think rates are being held down to ease the government's bill, they can demand more yield to hold long bonds, so the debt that rolls over gets more expensive.

Savers pay the other side. When prices rise faster than what cash and savings earn, households lose buying power. The row on /risk/ follows the refinancing path: how much Treasury borrows, how strongly buyers bid at auction, and what that does to mortgage rates.

Where we stand

Numbers as of 8 Oct 2026.

The row tracks one chain. Treasury borrows, buyers bid for the new debt at auction, and the yields they demand pass through to borrowing costs like mortgages.

Step 1, Borrow. Treasury estimates it will borrow $628B in Oct to Dec 2026, counting the marketable debt it sells to private investors minus the debt it pays off. That is $114B above its 4-quarter average of $514B. The latest actual figure, for Apr to Jun 2026, was $190B. Across the last 14 quarters it has ranged from $65B in Apr to Jun 2025 to $1,058B in Jul to Sep 2025.

Step 2, Auctions. At the latest 10-year note auction, on 7 Oct 2026, buyers bid $2.77 for every $1 of notes on offer, a bid-to-cover ratio of 2.77. The notes sold at a high yield, the top rate Treasury accepted, of 5.300%, up from 4.834% at the 9 Sep auction. The ratio is 0.23 above its 6-auction average of 2.54, so demand was stronger than recent. It is the strongest ratio of the last 24 auctions.

Step 3, Costs. Freddie Mac's average 30-year fixed mortgage rate was 7.40% in the week of 8 Oct 2026, up 12 basis points from 7.28% the week before. That is 59 basis points above its 13-week average of 6.81% and the highest in 52 weeks. The low in that window was 5.98% on 26 Feb. A basis point is a hundredth of a percentage point.

Today borrowing and mortgage rates show strain. Auction demand is holding up.

What we're watching

• A 10-year auction bid-to-cover below 2.54, the current 6-auction average, which the row would mark weaker than recent.
• The 30-year mortgage rate climbing past 7.40%, already its highest in 52 weeks, or falling back below 6.81%, its 13-week average.
• Treasury's next quarterly refunding estimates, which will update the $628B figure for Oct to Dec 2026.
• Foreign official holdings of Treasuries in TIC Table 5, near $3,773.1 billion at the end of July 2026, and the dollar's share of world currency reserves in IMF COFER data, near 57.13% in the first quarter of 2026.