The Final Countdown?
Ballooning Treasury Issuance and The Rising U.S. Debt

Thomas Smith Tani Fukui Shan Ahmed
NOV 30, 2023

We recommend

Economic Monthly Well, Do You Feel Lucky? 

Relative Value & Tactical Asset Allocation Q4 2023

Key Takeaways:

  • U.S. publicly held debt is on an alarming path.
  • In every scenario that we examine, publicly held debt rises – up to 139% of GDP by 2029.
  • Annual net issuance is expected to remain four times as high as high as before the pandemic, raising questions about how easily markets can absorb the issuance.
  • Debt metrics are poor and projected to worsen; U.S. debt-to-GDP is far worse than Fitch’s AA-rated median and its interest-to-revenue ratio of over 10% is more akin to a BBB-rated country.
  • The probability of further downgrades and outlook revisions will increase significantly if drastic fiscal action is not taken.