The US Treasury will issue more short-term debt to help fund its widening budget deficit, a continuation of a Biden-era policy that Treasury secretary Scott Bessent had previously disavowed. 

The Treasury department said on Wednesday that it would keep the size of its auctions of longer-dated bonds steady over the next “several quarters”. This suggests a vast increase in issuance of shorter-term debt — Treasury bills that mature in anything between a week and a year — to meet the $1tn the department needs this quarter to keep the government running.

Despite disavowing it before he took office, Bessent has adopted the debt management strategy of his predecessor Janet Yellen. Skewing its debt issuance to more shorter-dated bonds allows the government to step up its borrowing without sending yields on longer-dated bonds higher. The yields — which move inversely to prices — of longer-dated bonds determine interest rates across the economy, from the government’s borrowing costs to mortgage rates.