“Well, wha– why would we do that?” Scott Bessent wondered on Monday, when Donald Trump’s Treasury Secretary sat for yet another in an endless succession of Bloomberg TV interviews.

He was responding to an admittedly silly question from Sonali Basak, who asked when it might be time for the US to “term out” its debt profile.

I’ve been over this a hundred times if I’ve been over it once, but to reiterate: The Treasury Secretary isn’t a CFO. He (or she) has to consider a whole constellation of factors when it comes to issuance strategy, not all of which relate strictly back to getting US taxpayers “the best deal.”

Yes, it’s obviously better to lock in low borrowing costs for longer, all else equal. But all else isn’t even close to equal in this context. Treasury stopped issuing tactically decades ago in favor of a “regular and predictable” approach aimed at fostering stability in the world’s deepest, most liquid market. It’s a balancing act between looking out for the interests of American taxpayers and staying apprised of market needs.

Further, this isn’t a speedboat, it’s the Titanic. You can carry on publicly about the many virtues of being “nimble” and opportunistic all you like, but the mathematical reality is that it’s impossible to shift the WAM of America’s debt profile on a dime.

With those obligatory caveats and reminders, this is a terrible time to increase coupon auction sizes at the long end. Indeed, the market wants the opposite from Bessent: If things keep going like they’re going in terms of longer-end yields staying sticky amid persistent rumors of a foreign “buyer’s strike” tied to concerns about a tipping point for America’s allegedly unsustainable fiscal trajectory, Bessent may need to cut the size of coupon sales later this year or early next.

Have a look at the figure below from BMO’s Ian Lyngen. It plots the term premium with interest payments as a share of US tax receipts.

As Lyngen noted, editorializing around the visual, interest payments on government debt now “eat up roughly a third of tax receipts,” markedly higher versus the five-decade low hit just before the Fed started hiking rates in early 2022.

One way to make that situation worse (or at least risk making it worse) is to issue more at the long-end of the curve. Over-supply concerns are part and parcel of the term premium rebuild.

“The time to have done that would have been in 2021, 2022,” Bessent went on Monday, implicitly rekindling his criticism of Janet Yellen who, according to Bessent and a handful of other people who apparently don’t know as much about Treasury issuance as they should given their experience in financial markets, might’ve taken advantage of low long-term borrowing costs by flooding the market with 10-years and out paper during her tenure.

I realize this isn’t the most exciting discussion topic, but it’s important. Bessent, assuming he remains Treasury Secretary and doesn’t get tapped for Jerome Powell’s job, will face a tough decision at some point over the next year: Auction sizes will have to increase eventually given deficit spending, and if the term premium stays elevated and the market continues to exhibit consternation about over-supply and deteriorating fiscal fundamentals, that “extra” issuance will have to be concentrated at the front-end.

To be sure, auctions have gone fine recently, and there’s scant evidence to suggest foreign “buyer’s strike” rumors are anything more than that: Rumors. But as the figure above reminds you, there’s a very long way to go if the term premium has a date with pre-GFC norms, and Trump’s adversarial approach to conducting America’s affairs isn’t conducive to any relief on that front, to say nothing of his disregard for fiscal rectitude.

“We’re left to ponder how comfortable the market is with the 65-75bps of term premium currently priced into the 10-year sector as adequate compensation for the eventual increase in auction sizes in 2026 and beyond,” BMO’s Lyngen remarked, adding that there’s “a case to be made that the current level of US rates has adjusted to the realities of larger deficits and is in the process of moving on.”

We’ll see. Over the weekend, while badgering Republicans to pass his “big, beautiful bill,” Trump reminded the GOP’s cost-cutters that “you still have to get reelected.” “Don’t go too crazy!” he exhorted, before falling back on voodoo economics. “We will make it all up, times 10, with GROWTH,” he said.