U.S. Debt Risk Surges, Shifts to Short-Term Treasuries to Meet Growing Borrowing Needs

BlockBeats News, August 16th, the U.S. Treasury is increasingly relying on short-term debt: Currently, Treasury bills account for 21% of the tradable Treasury securities market, a proportion close to the highest level since 2020. At that time, the borrowing by the U.S. federal government surged in response to the pandemic. This figure is much higher than the 10-15% range observed during 2012-2019. In comparison, during the 2008 financial crisis, this ratio reached about 34%.

At the same time, the U.S. government is increasingly relying on short-term Treasury bills to meet its growing borrowing needs rather than long-term bonds. If the U.S. Treasury continues to issue long-term debt at the current pace until the 2027 fiscal year, then the share of Treasury bills in the total debt will be 25%, the highest since 2004. However, this practice will increase the government's exposure to short-term interest rate fluctuations. If rates continue to rise or rise again, the cost of servicing the debt will become even more burdensome. The U.S. debt crisis is now unfolding in full swing.