Treasury plans to borrow $618 billion this quarter as factory input prices rise for a 25th month

Less borrowing than last quarter

Treasury said on November 2 that it expects to borrow a net $618 billion in privately held marketable debt in October through December, assuming an end-of-December cash balance of $850 billion. That is $10 billion below the August estimate, mainly because the quarter started with more cash than assumed. Treasury also noted that, excluding that factor, this quarter's borrowing need is $24 billion higher than estimated in August.

Last quarter (July to September), Treasury actually borrowed $742 billion and ended with $984 billion in cash; in August it had estimated $739 billion and $950 billion. Next quarter (January to March 2027), it expects to borrow $800 billion, assuming an end-of-March cash balance of $1 trillion.

Cash falls, then rises: two phases for liquidity

Going from $984 billion to $850 billion means Treasury plans to spend down $134 billion of cash this quarter, which its table counts as reducing borrowing. In the first quarter of 2027, cash is set to climb from $850 billion back to $1 trillion, and that extra $150 billion has to be borrowed.

Treasury keeps its cash in an account at the Federal Reserve. When that balance falls, money is paid out to the private sector and, all else equal, bank reserves rise; when the account is rebuilt, the effect runs the other way. This is a basic accounting relationship. The actual effect also depends on the Fed's balance sheet and the overnight reverse repo facility, which BlockBlah did not check for this article.

Our read is that the fourth-quarter cash drawdown leans toward looser funding conditions and the first-quarter rebuild leans tighter. That describes a direction only; it does not mean bitcoin will rise or fall because of it.

Wednesday: watch for any change in auction sizes

Treasury will release its quarterly refunding details at 8:30 a.m. ET on November 4, which is 9:30 p.m. in Taipei. According to Reuters, the announcement covers auction sizes for 3-year and 10-year notes and 30-year bonds.

Reuters reported on November 2 that dealers broadly expect coupon auction sizes to stay unchanged this time, but expect cuts to 20-year and 30-year bonds at some point next year, offset by more 2- to 10-year issuance. TD Securities forecasts net bill supply of about $678 billion from November 2026 to January 2027. These are market expectations, not Treasury decisions.

If Treasury's statement hints at smaller long-end auctions, the market will reassess supply pressure on long bonds; if the wording stays the same, attention stays on bill issuance. This is a conditional scenario, not a forecast.

Factories are busier, and inputs cost more

Also on November 2, the Institute for Supply Management (ISM) reported an October manufacturing PMI of 55.5, up from 54.5 in September and the 10th straight month of expansion. The production index was 59, the highest since November 2021; new orders were 55.5; employment was 52.4, slightly lower than September.

The prices index was 75.2, down from 77.9 in September, but input prices have now risen for 25 straight months. The share of respondents reporting higher prices was 53.1%, versus 58.6% in September. Susan Spence, who chairs ISM's Manufacturing Business Survey Committee, said the increases are mainly driven by steel and aluminum prices, import tariffs and petroleum-based products pushed up by the Middle East conflict.

Respondents' mood did not improve with the numbers. ISM counted 34% positive and 66% negative comments in October; among the negative ones, 62% mentioned price volatility, 25% tariffs and 21% the Iran war.

What it means for bitcoin

CoinGecko quoted bitcoin at $76,711 at 8:02 a.m. Taipei time on November 3, down about 2.1% over 24 hours.

The two reports point in different directions. Treasury drawing down cash this quarter leans toward looser funding, while a manufacturing prices index still above 75 shows goods-side price pressure has not faded. Two Fed officials already voted for a hike at the October meeting, and data like this keeps that debate going. BlockBlah sees no clear winner in the near term. Bitcoin is also still reacting to the aftermath of the Binance security incident and to ETF flows this week, so no single report explains its moves.

Dates to watch: the refunding announcement at 9:30 p.m. Taipei time on November 4, the October jobs report at 9:30 p.m. on November 6, and the November ISM manufacturing report at 11 p.m. on December 1. US midterm elections take place on November 3 (ET), and CoinDesk reports investors are watching them too. This is a data roundup, not investment advice.