2 Budget deficits. The government’s activities can influence the supply of bonds in several ways. The US Treasury issues bonds to finance government deficits, caused by gaps between the government’s expenditures and its revenues. To finance these gaps, the Treasury sells more bonds, and the quantity of bonds supplied at each bond price increases. Higher government deficits increase the supply of bonds and shift the supply curve to the right. By contrast, government surpluses decrease the supply of bonds and shift the supply curve to the left.