When the U.S. Treasury Department wants to understand what is happening in the market for its bonds, it asks the people who buy and sell them in massive quantities.

Why it matters: Their latest answers — amid skyrocketing borrowing costs — are fascinating. They describe shifts in the supply and demand of U.S. debt that could have negative lasting consequences for the ease and expense with which the federal government can borrow.

Driving the news: This morning, Treasury announced its latest plans for debt issuance — more hotly anticipated than usual amid jittery trading and worries that the U.S. government's borrowing needs will require more bond issuance than the market can comfortably accommodate.

• The Borrowing Advisory Committee, consisting of representatives from 15 major firms, issued its report to Secretary Janet Yellen on what is going on beneath the surface of the market.
• It comes at a delicate moment, as rates on long-term Treasury bonds have risen by more than a percentage point since the summer, reaching 16-year highs.
• The higher rates go, the more expensive it will be for the U.S. government to finance large budget deficits — not to mention homebuyers and corporate borrowers whose interest rates tend to move in lockstep with Treasuries.

State of play: The committee's answers mostly track with observations by government officials. The outlook for U.S. economic growth has improved over the last few months, which tends to push rates upward, as Yellen emphasized last week.

• There also looks to be a strong possibility that the "neutral" interest rate has risen, due to powerful demographic and technological factors, among others.

Yes, but: They also see evidence of a "growing imbalance between supply of and demand for US Treasury debt" that may have contributed.

• "The $1.7 trillion fiscal year 2023 deficit was larger than originally forecast and both private sector and official projections expect a similarly large deficit next year," the committee noted.
• "In addition, the Federal Reserve is allowing $60 billion in US Treasuries to run off its balance sheet each month, funding that will need to be replaced by issuance to the private market," it said.

Meanwhile, "[d]emand for US Treasuries may have softened among several traditional buyers," the committee writes. Banks have been cutting back on their long-term Treasury holdings, to the tune of $154 billion.

• Also, "some foreign central banks may consider liquidating Treasury securities in the process of defending their currencies," they write.
• It is all part of a "recent shift to more price sensitive investors" for Treasury bonds. "Effectively, while there is still reasonable demand for US Treasuries from many domestic and international market participants, it has not kept pace with the increase in supply."

The bottom line: The government is borrowing a lot of money, and for a variety of reasons, fewer investors are eager to lend it. That's part of why interest rates have risen so much.

The U.S. labor market continues cruising, according to new data out this morning, but the latest data on the manufacturing sector is less reassuring.

Driving the news: The Job Openings and Labor Turnover report, a key source of information about the inner workings of the job market, reflected a steady-as-can-be rate of hirings and firings in September.

• There were only small changes in the number of job openings (up 56,000), hires (up 21,000) and people voluntarily quitting their jobs (down 2,000).
• The number of layoffs and discharges — people leaving their jobs involuntarily — had the biggest swing, but in a positive direction for labor market health. It was down 165,000.
• The numbers add up to a rock-solid job market, consistent with other evidence that the economy firmed over the late summer.

Yes, but: One of the first pieces of October economic data tells a different story. The Institute for Supply Management's manufacturing activity index shows a surprise plunge to 46.7, down from 49.

• Numbers below 50 indicate contraction in the factory sector.
• It was pulled down by new orders, which tends to be forward-looking. That sub-index was 45.5, down from 49.2

What they're saying: "Economy absolutely slowing down" said an unnamed respondent in the survey from the chemical products industry. "Less optimism regarding the first quarter of 2024."