Debt Dilemma: 1/3 of U.S. Government Debt Set to Mature as Auction Sizes Surge by 23% in 2024

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In a concerning development, approximately one-third of the U.S. government’s debt is slated to mature in the next 12 months, posing a potential problem as highlighted by Apollo, one of the world’s largest asset managers. Apollo cautions that as we move into 2024, Treasury auction sizes are projected to be, on average, 23% higher than in 2023.

The recent trend in Treasury auctions reveals potential challenges. In October, the U.S. sold $20 billion of 30-year bonds, and dealers had to absorb 18% of the supply, exceeding the typical share of about 11%. This pattern repeated with dealers buying an additional 17% today. Moreover, this wave of debt refinancing is likely to contribute to a significant rise in interest expenses, compounding the existing upward trajectory. Payments on debt have doubled from $1 billion a day pre-pandemic to $2 billion a day in 2023, emphasizing the unsustainable nature of the ballooning U.S. debt.

The country’s current debt stands at an astronomical $34 trillion, and veteran analyst Josh Steiner warns that the trajectory is unsustainable, with deficits projected to grow from approximately $1.5 trillion to $2.5-3 trillion per year over the next decade. This mounting debt raises concerns about reaching a critical threshold or tipping point, with Steiner noting, “There’s a lot of debt.”

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