Rising US Government Debt: What to Watch?

Apollo Chief Economist

With long rates falling in recent weeks, Treasury supply has seemingly become less important as a driver of long rates.

But the fiscal challenges have not disappeared.

Next week, we have a 10-year auction on Monday and a 30-year auction on Tuesday. And looking into 2024, Treasury auction sizes will be, on average, 23% higher than in 2023.

Because of the constant rise in government debt levels, investors need to monitor not only Treasury auctions but also rating agencies and the term premium.

In this short presentation is a collection of relevant data for thinking about the US fiscal situation and the likely transmission channels to financial markets.

Rising US government debt: What to watch?Treasury auctions, rating agencies, and the term premium
Trillion-dollar deficits as far as the eye can see
Source: OMB, Haver Analytics, Apollo Chief Economist
Under current policies, debt outstanding will grow to 200% of GDP
Source: CBO, Haver Analytics, Apollo Chief Economist
Who owns different countries’ government debt?
Source: The IMF, Apollo Chief Economist. Note: Data as of year-end 2022.

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