JPMorgan: U.S. Treasury May Delay Adjusting Bond Issuance Guidance Due to Midterm Elections
Alina Collins
JPMorgan strategists expect Treasury to leave its bond auction guidance unchanged next week — not because the fiscal math supports it, but because pushing long-end yields higher before November midterms is politically unacceptable.
What was Treasury supposed to change?
JPMorgan's team, led by Jay Barry, estimates a $3.7 trillion funding gap over the next four fiscal years.
Under "prudent debt management," Treasury should drop the word "at least" from its guidance that auction sizes will remain stable for "at least the next several quarters."
This means → removing "at least" would signal to markets that longer-dated bond supply is about to rise.
Why won't they touch it now?
Long-end Treasury yields are near their highest levels since Trump took office; markets are acutely sensitive to borrowing costs.
Secretary Scott Bessent has publicly tied issuance plans to yield levels, with a clear focus on keeping long-term rates down.
In plain terms = changing the guidance now tells the market "we're selling more long bonds" — buyers would immediately demand higher yields, directly contradicting Bessent's rate goal.
Where does the election calendar land?
The November quarterly refunding announcement falls just one day after the midterm elections — an extremely sensitive window.
The Iran war has pushed oil prices higher, already dragging on the Trump administration's approval ratings — another negative headline is the last thing officials want.
This means → even if the fiscal case demands a change now, the political calendar pushes the earliest safe window to 2027.
What happens if they change it anyway?
JPMorgan warns that dropping "at least" could trigger yield-curve steepening — long-term rates rising faster than short-term rates.
Market participants would demand a higher term premium (extra compensation for holding longer-dated bonds) to absorb the expected increase in duration supply.
This reflects the team's comparison to August 2023, when a similar supply signal triggered a sharp Treasury sell-off.
What is JPMorgan's bottom line?
The probability that Treasury leaves its forward guidance unchanged is rising.
In plain terms = it's not that the change isn't needed — it's that officials don't dare make it before the election. Political risk outweighs fiscal prudence.
The real decision window opens only after the midterms pass and market sentiment stabilizes.
Content is for reference only, not financial advice.