Treasury Secretary Scott Bessent is maintaining heavy reliance on short-term Treasury bills even as the Federal Reserve under Chair Kevin Warsh signals potential rate increases. About 85% of recent debt issuance has been in bills maturing within a year, leaving roughly a third of federal debt due for refinancing within 12 months. Net interest on the national debt is projected to hit $1.0 trillion in fiscal 2026, already exceeding Medicare and defense spending. Analysts at Bank of America now forecast three quarter-point rate hikes this year, and Capital Economics warns that a sharp rise in short-dated yields from an unexpected hike is the biggest risk to the debt burden. The Treasury's next quarterly refunding announcement in early August will reveal whether it begins locking in longer maturities or continues betting that the Fed will pause.
Bank of America CorpBank of America analysts forecast three quarter-point rate hikes this year, which could affect the bank's net interest margin, but the article does not detail the impact on BofA specifically.