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Debt, debt and more debt

As the U.S. is deploying military aid to Israel and continues to support Ukraine and the different programs it maintains onshore, the deficit keeps growing. The U.S. treasury is coming with a plan to finance that deficit issuing debt. In the chart below, you can see what’s expected to be issued under the neutral scenario. There is a big increase in issuance for 2023 but there is an even bigger increase for 2024; approximately 30% increment in tenors up to 5 years, 10% for the 10 year, which is the benchmark everybody looks at, and which will have a big increase in issuance this year. And then the long end of the curve with 50% increase when you consider both years together. To put it in perspective, during the second half of 2023 the treasury will issue $2Tn, and according to the chart below, for 2024 the expected amount will be $4Tn. That’s approximately 25% of all current existing U.S. treasury debt. Artificial Intelligence will really need to do wonders to increase productivity to avoid collapse.

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Chart source: Apollo.

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