Over $100 billion worth of massive debt will hit the market this week! The pressure on US government borrowing will continue until mid-June, making short-term risky assets less optimistic.

Notice that, about two weeks ago, the liquidity flow from the Treasury Department shifted from "support" for risk assets to "restriction." This week will see a particularly large round of liquidity absorption as the Treasury Department ramps up its debt issuance, with net issuance of short-term Treasury bonds approaching $59 billion and another $47 billion in medium to long-term Treasury bonds. In total, over $100 billion in liquidity will need to be absorbed by the market this week. Under the mechanism of the post-reverse repurchase tool era, this dynamic seems to have undergone a substantial shift. Since the reverse repurchase tools hit their lower limit at the end of October, the fluctuations in liquidity have become more clearly visible through changes in the short-term Treasury bond issuance plans. This may explain why the market did not experience the usual sluggish performance in April, despite the increase in the Treasury General Account (TGA) and the decrease in Federal Reserve reserves. During this period, the Treasury Department has been repurchasing (reducing issuance) of short-term Treasury bonds, effectively injecting liquidity into the market. In this post-reverse repurchase tool era, this dynamic seems to have changed somewhat. Since the Federal Reserve's reverse repurchase tools hit the bottom in October last year, the issuance of short-term Treasury bonds has become one of the most clear short-term liquidity driving factors for risk assets. When the Treasury Department issues more short-term Treasury bonds than the amount that matures, risk assets usually struggle; whereas when the amount of short-term Treasury bonds maturing exceeds the issuance, risk assets tend to perform well. Impact on the stock market Therefore, this may not be a coincidence: although the S&P 500 Index did not see a sharp decline, it has not surpassed the high set on May 14th. It was in that same week that the issuance of short-term Treasury bonds shifted from repurchasing (net repurchases) to net new issuance. This relationship has been very significant. From October 28, 2025, to May 22, 2026, on the 30 trading days where short-term Treasury bonds recorded net issuance, the S&P 500 Index only saw gains on 9 days, with an average increase of 47 basis points and an average decrease of 89 basis points. In contrast, on all other trading days, the index saw gains on 70 out of 113 days, with an average increase of 65 basis points and an average decrease of 52 basis points. On repurchasing (reducing issuance) days, the situation is completely opposite. From December 2, 2025, to May 22, 2026, the index saw gains on 18 out of 28 days, with an average increase of 59 basis points and an average decrease of 47 basis points. In comparison, on other trading days, the index saw gains on 51 out of 115 days, with an average increase of 65 basis points and a decrease of 68 basis points. Impact on Bitcoin For asset categories like Bitcoin, the effects reflected in this data are more profound. On short-term Treasury bond repurchasing (reducing issuance) days, Bitcoin saw gains on 15 out of 28 days, with an average increase of 1.9% and an average decrease of 1.18%; in contrast, on other trading days, it only saw gains on 82 out of 180 days, with an average increase of 1.67% and a decrease of 1.89%. However, Bitcoin's performance on short-term Treasury bond net issuance days is particularly poor, with gains on only 8 out of 30 days, and an average increase of only 98 basis points, while the average decrease is as high as 2.8%. On non-settlement days, Bitcoin saw gains on 89 out of 177 days, with an average increase of 1.78% and a decrease of 1.58%. Breathing room in late June This suggests that the current round of Treasury short-term bond issuance will continue to put pressure on the stock market and risk assets, persisting until mid-June (around June 15th, the tax deadline). At that point, the Treasury Department is likely to enter another temporary period of short-term Treasury bond repurchase, before transitioning back to net issuance after the mid-term tax deadline. Following this transition, the Treasury Department may maintain a more sustainable net issuance cycle that continues until mid-September. Overall, although the current sample size is still relatively small, the signals released are quite clear.