The Treasury Department is having to sell more debt to finance the government's ballooning deficit, stemming from the massive federal tax overhaul in December and the spending deal passed in February. Still, bond yields have remained in a narrow range, suggesting investors may not be fretting about the swelling debt supply.

"There will be no relief from supply especially from bills going into October," said Tom Simons, money market strategist at Jefferies & Co in New York. Supply is expected to run high at least until the Treasury provides updated forecasts on its borrowing needs, next due in November - and might even accelerate further.

This week, the Treasury will sell $34 billion in three-year notes, with $26 billion in 10-year debt on Wednesday and $18 billion in 30-year bonds on Thursday. It will also auction $51 billion in three-month bills and $45 billion in six-month bills, together with an expected $65 billion in one-month bills.

The supply will fall short of a record week of $294 billion set in March but continues a trend higher since February.

Analysts, who said the market would have no trouble digesting this week's offerings, see the government as becoming increasingly dependent on private investors for cash as the Fed further reduces its bond holdings. The goal is to shrink a balance sheet that had grown to more than $4 trillion from three massive rounds of asset purchases to combat the previous recession.

"I think they will go fine," Matt Freund, head of fixed income strategies at Calamos Investments in Chicago, said of this week's debt auctions.

Analysts projected that supply will continue to climb, and that March's record-setting weekly amount would be eclipsed in the coming weeks.

The Treasury said on July 30 it expected to borrow $56 billion more during the third quarter than its earlier estimate, resulting in issuing $329 billion in debt securities during this period.