Investors are bracing for a flood of more than $1 trillion of Treasury bills in the wake of the debt-ceiling fight, potentially sparking a new bout of volatility in financial markets.
Some on Wall Street fear that roughly $850 billion in bond issuance that was shelved until a debt-ceiling deal was passed—sales expected between now and the end of September, according to JPMorgan analysts—will overwhelm buyers, jolting markets and raising short-term borrowing costs.
I dunno. That's $1 trillion in borrowing over the course of four months. We did that three times in a row during 2020 without any problems. Hell, we borrowed $1 trillion in April alone. This seems more likely to be an invented problem than something that anyone is seriously concerned about.
Soybeans, and sovereign debt, seem to be the two things the US exports, that the world actually wants.
But it's in the WSJ, so there's always an undercurrent of "government debt bad" (TBF, also occurs in the MSM).
So anything that makes it sound big and bad is good to the WSJ.
+1
It is WSJ news not edito page. Not the same thing
One has similar analyses in other places. The concern is a real one and not merely WSJ. It is an issue of liquidity .
https://jabberwocking.com/raw-data-interest-on-the-national-debt-2/ …
true--interest payments on national debt going up as percent of GDP. Those numbers will swing depending on inflation rates and yields.
As for the back log in issuance of new debt, I'd guess a fair amount is not "new" debt but older bonds, etc., coming due and new debt being issued to cover those payments. That is, the issuance of almost $1 trillion in T-bills does not mean we've just added $1 trillion to our national debt. Granted, we need to pay back Covid emergency spending, so to speak, and that start's with cutting Trump's tax cuts.
True, much of it may be rolling over. It is affected by higher rates just as if it were new debt.
That's about what the Treasury announced back in January as its anticipated borrowing for the first quarter. Would be vaguely interesting to know whether WSJ applied "flood" to that estimate too. But only vaguely, this being WSJ and all.
Big numbers without context are scary. OMG, A FLOOD!!!
It appears that the WSJ is being deceptive here.
Nooooo....
😉
Murdochian properties count on the ignorance of their readership. That the WSJ's intended readership is finance bros and businessmen makes no difference (indeed, likely makes them easier marks).
Based on Repo rates it is much ado about nothing. That is the market the Treasuries are financed in.
What if the Fed asset balance were the primary driver of modern inflation?
I'll be eagerly awaiting the follow-up by WSJ and other media when nothing untoward happens.