The US government is increasing its reliance on short-term debt to cover an annual budget deficit of approximately $2 trillion. Treasury Secretary Scott Bessent plans to issue $1 trillion in Treasury bills to manage long-term interest rates, which exceeded 5% in mid-September 2026, marking a 19-year high.
Known as the Treasury Twist, this strategy involves ramping up T-bill issuance while expanding buybacks of 10- to 30-year securities, with buybacks set to exceed $4 billion starting September 9-10, 2026. T-bills currently account for nearly 22% of the total national debt, which has surpassed $40 trillion.
The Treasury Borrowing Advisory Committee previously recommended keeping T-bills between 15% and 20% of total debt. Currently, average weekly issuance exceeds $500 billion, and interest payments on national debt are projected to exceed $1 trillion this fiscal year, surpassing total defense spending.
The GENIUS Act of July 2025 mandates that stablecoin issuers back tokens with 100% reserves in T-bills maturing in 93 days or less. This has made firms like Circle and Tether major buyers of government debt. Analysts estimate that if the stablecoin market reaches $2 trillion by 2028, it could drive $800 billion to $1 trillion in additional demand for T-bills.
