The federal response to the Covid-19 pandemic involved trillions of dollars in unplanned spending, forcing a substantial increase in debt issuance by the U.S. Treasury. Now that those programs are winding down, analysts expect the Treasury to cut back on its sales of notes and bonds, though the timing is still uncertain.

“Their financing needs will fall very sharply from 2021 into 2022,” Bank of America’s Meghan Swiber told Bloomberg News. “We think Treasury needs to implement cuts sooner rather than later -- or it risks being over-funded.”

Analysts at JPMorgan Chase expect the Treasury to issue about $1 trillion less in notes and bonds in 2022 compared to this year.

That doesn’t mean, however, that debt will be smaller or that deficits will disappear. “Our equilibrium end state -- say, after August 2022 -- will still have the debt higher than before the pandemic, with the recognition that deficits are going to be here for a long time,” John Briggs of Natwest Markets told Bloomberg.

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