Bills Are a Fifth of the Debt, and the Costliest Fifth
Treasury has kept its bill share above the advisory committee's 15 to 20 percent range for three years. Bills now carry a higher average rate than notes or bonds, and the note stack is still repricing upward.
Editor's note: Further review September 20, 2026: Qualified bill-market capacity and the forward interest-cost conclusion. Charts now use the first preserved September 20 archive; no earlier retrieval vintage is claimed.
At the end of August the Treasury had $7,248 billion of bills outstanding against $31,828 billion of marketable debt: 22.8 percent. The Treasury Borrowing Advisory Committee’s standing advice is that bills should sit between 15 and 20 percent of the total over the medium term; the committee’s 2024 review of the question said Treasury should keep the flexibility to fall below 15 percent or rise modestly above 20 to keep coupon issuance regular and predictable. The share has been above 20 percent at every month-end since September 2023, thirty-six in a row, which is a long time to call temporary.
The path matters more than the level. Bills were 14.5 percent of the debt at the end of 2019, jumped to 25.5 percent in June 2020 when the pandemic deficit was financed almost entirely at the front end, and were worked back down to 15.4 percent by the end of 2022, just inside the range. Then the share climbed again, to 21.5 percent at the end of 2023, and has stayed there: 21.9 percent at the end of 2024, 21.6 percent at the end of 2025, 22.8 percent now. Since the end of 2023 marketable debt has grown by $5,456 billion; bills supplied $1,572 billion of that, about 29 percent. The quarterly refunding statements have repeated, most recently on August 5, that Treasury anticipates maintaining nominal coupon and floating-rate note auction sizes for at least the next several quarters. Bills are where the residual went.
Bills offer short maturities and flexible financing, but that does not establish unlimited demand or the lowest all-in funding cost. In this snapshot they are not the cheapest to carry. In August the average interest rate on bills was 3.79 percent, against 3.35 percent on notes, 3.45 percent on bonds and 3.48 percent across all marketable debt. In January 2022 the same figures were 0.10 percent on bills and 1.40 percent on notes. The relationship inverted when the Fed raised rates, and it has not reverted, because the bill stock reprices in weeks while the note stock reprices over years.
- Bills
- Notes
- All marketable
Bills track the policy rate within months. The average rate on notes has risen every year since 2022 and kept climbing through August, with the policy rate unchanged from January until the Fed's increase on September 16.
Show the numbers (last 24)
| Date | Bills | Notes | All marketable |
|---|---|---|---|
| 2026-08-31 | 3.79 | 3.35 | 3.48 |
| 2026-07-31 | 3.76 | 3.31 | 3.44 |
| 2026-06-30 | 3.71 | 3.28 | 3.41 |
| 2026-05-31 | 3.69 | 3.25 | 3.39 |
| 2026-04-30 | 3.70 | 3.23 | 3.37 |
| 2026-03-31 | 3.70 | 3.21 | 3.37 |
| 2026-02-28 | 3.72 | 3.19 | 3.36 |
| 2026-01-31 | 3.76 | 3.17 | 3.35 |
| 2025-12-31 | 3.86 | 3.16 | 3.36 |
| 2025-11-30 | 3.98 | 3.13 | 3.38 |
| 2025-10-31 | 4.08 | 3.12 | 3.39 |
| 2025-09-30 | 4.19 | 3.11 | 3.41 |
| 2025-08-31 | 4.28 | 3.09 | 3.42 |
| 2025-07-31 | 4.31 | 3.07 | 3.40 |
| 2025-06-30 | 4.31 | 3.05 | 3.38 |
| 2025-05-31 | 4.32 | 3.01 | 3.36 |
| 2025-04-30 | 4.34 | 2.99 | 3.35 |
| 2025-03-31 | 4.36 | 2.96 | 3.35 |
| 2025-02-28 | 4.40 | 2.93 | 3.35 |
| 2025-01-31 | 4.46 | 2.89 | 3.34 |
| 2024-12-31 | 4.59 | 2.85 | 3.34 |
| 2024-11-30 | 4.74 | 2.79 | 3.36 |
| 2024-10-31 | 4.90 | 2.77 | 3.36 |
| 2024-09-30 | 5.15 | 2.73 | 3.39 |
That second mechanism is the one to watch. The average rate on notes was 2.69 percent in August 2024, 3.09 percent a year later and 3.35 percent this August. The policy rate did not move between January and August; the note average rose anyway, because notes issued between 2016 and 2021 at one or two percent are maturing and being replaced at today’s yields. On September 18 the two-year par yield was 4.76 percent and the ten-year 5.01 percent. Replacing a lower-coupon note at a higher rate raises its servicing cost; the aggregate path also depends on new issuance, maturities and future yields.
Put the two together and the interest bill remains sensitive to both near-term rates and the pace of refinancing. The bill share ties a fifth of the debt to the overnight rate almost immediately: the quarter-point increase the FOMC made on September 16, to 3.75 to 4 percent, will show up in the bill average within weeks. The coupon stack reprices upward slowly and mechanically. Net interest outlays in the first eleven months of fiscal 2026 were $1,017 billion, 21 cents of every dollar of receipts, up from 19.9 cents a year earlier. The interest tracker shows the same eleven-month comparison for each year since 2015. Moving the bill share back inside the TBAC range would mean larger coupon auctions, at the long end the Treasury has just started buying back. That is the trade-off the November refunding has to make, and the data say it has been deferred for three years.