The world’s largest, most-important financial market is growing by leaps and bounds. On Wall Street, that is making people nervous.
Annual issuance of U.S. Treasurys has exploded, nearly doubling since the pandemic began. The government sold a record $23 trillion worth in 2023. And few think the spree is going to slow soon, given the widespread expectation that government spending will continue to rise regardless of who wins November’s elections.
Rapid growth in markets from tech stocks to mortgage bonds has ended badly in the past. Treasurys are considered the safest and easiest-to-trade securities on Wall Street, and many worry that any instability there could rapidly spread.
The market’s growth isn’t the only thing troubling investors: Some are also concerned about new rules that are changing the way the trading works. That could help alleviate strains but also create unforeseen consequences, such as the cash shortages in 2019 and 2020 that snarled trading and boosted interest rates.
“None of these regulations solves the mounting pile of Treasury debt,” said Steven Kelly, associate director of research at the Yale Program on Financial Stability.
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