Scott Bessent's first quarterly refunding announcement as US Treasury Secretary highlights his approach to debt issuance amidst economic strength and previous criticism of current strategies. Bessent noted a significant rise in short-term bills relative to long-duration bonds, a tactic typically reserved for emergencies. This is concerning given weak demand for long-term bonds amidst rising fiscal deficits. Despite his past critiques, Bessent's recent announcement maintained the existing policy approach that he previously opposed, reflecting market norms. The Treasury also upheld its forward guidance on nominal auction sizes against recommendations to modify it, indicating a commitment to this strategy despite concerns about fiscal uncertainty. Observers are left questioning the sustainability of these policies in the absence of structural demand for long-duration bonds, particularly as foreign central banks retract from long-term debt. Bessent's actions suggest a cautious continuation of current practices rather than an immediate shift toward normalization in debt issuance.

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