Does this mean that the demand for new treasuries is drying up? That would suggest that they would need to raise interest rates further to attract more money?

They're going to try to rebuy the older low interest bonds but that brings "significant operational complexity". Why would they give the money back that they just got by selling bonds?

Here's the report directly.

"Report to the Secretary of the Treasury from the Treasury Borrowing Advisory Committee | U.S. Department of the Treasury" https://home.treasury.gov/news/press-releases/jy1073