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A whopping $7.6 trillion in interest-bearing U.S. public debt will grow within a year, according to Apollo’s chief economist.
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This represents 31 percent of total U.S. government debt, putting significant pressure on rates.
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That’s still below 2020, when a significantly larger share of debt matures in one year.
Nearly a third of total US government debt is set to grow over the next 12 months, according to an analysis. Property management company Apollo.
Chief Economist Torsten Slack’s chart shows that the share of US public debt maturing in a year or less has risen steadily to pandemic-era levels and now stands at 31 percent. In dollar terms, it is $7.6 trillion, the highest since early 2021.
In addition, the public debt will grow to almost a quarter of US GDP in the near future. However, this is below the 2020 peak, when it accounted for a significantly larger share.
Still, Sløk said that coming in at $7.6 trillion is one source of upward pressure on U.S. prices.
The assumption is that in recent years, the federal deficit has been exploding, raising the US debt significantly. The Treasury Department has already been auctioned 1 trillion dollars in bonds Just in this quarter.
Meanwhile, the Federal Reserve’s aggressive tightening campaign over the past year and a half has pushed up the cost of borrowing, raising the cost of government debt.
As of Friday afternoon, the 10-year Treasury yield stood at 4.25%, and the three-month yield was 5.47%.
Rates have been under pressure from the Fed’s quantitative tightening program, which has driven large buyers out of the bond market.
The central bank has allowed 1 trillion dollars in debt to get off the balance sheet. Although yields have risen in recent months, QT’s overall impact on the market has so far been limited as the treasury has found enough buyers among money market funds and private traders.
But a research paper by the St. Louis Fed suggests money market fund participation in the near term from late August T-bill auctions have begun..
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