The US Treasury said on Monday it expects to borrow $618 billion in the fourth quarter, $10 billion less than it projected in August, due to a higher-than-assumed starting cash balance that is partially offset by lower projected net cash flows.

Stripping out the benefit of that larger starting cushion, the increase in borrowing needs is $24 billion above the August estimate. It assumes a cash balance of $850 billion at the end of December.

For the first quarter of 2027, Treasury projected borrowing of $800 billion, based on an end of March cash balance of $1 trillion.

The Treasury borrowed $742 billion in the third quarter, ending September with a cash balance of $984 billion. That was above its August projection of $739 billion but $30 billion less than expected when excluding the higher-than-assumed end-of-quarter cash balance.

Treasury will detail its refunding plans on Wednesday and traders will be watching closely for any sign that it plans to change auction sizes in coming quarters.

In August, the government said that it continues to evaluate potential future changes to its coupon and floating-rate auction sizes, a shift in language from its May refunding announcement when it noted potential future increases to the debt sales.

That raised speculation that the Treasury may eventually cut the size of some longer-dated auctions and lean more heavily on Treasury bills and short- and intermediate-dated coupons to cover its funding needs.

If that happens, analysts see the 20- and 30-year auctions as the most likely to be reduced, with coupon increases concentrated in the 2- to 7-year sector. Analysts are divided on whether benchmark 10-year note auctions could also grow.

Traders will also watch for changes to Treasury's buybacks, which are meant to support market liquidity. Treasury has increased its longer-dated buybacks to a maximum of $6 billion per operation from $2 billion.