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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