Good question. Right now, Treasury bills (which mature in less than a year) make up about 22% of U.S. debt. Treasury notes (2–10 year maturities) make up around 51%.
Each part of the bond market has its own supply and demand dynamics. Bills are basically cash-like instruments—they don’t have interest rate risk and their prices barely move. That’s a big reason there’s always strong demand for them.
You can’t simply shift a huge chunk of short-term debt into long-term bonds (like 20 or 30 year maturities). Those carry a lot of interest rate risk, and the pool of buyers is different (mostly pension funds and insurance companies).
If the Treasury tried to flood the market with long-term bonds, demand might not keep up, which would actually push long-term rates even higher.
We’re already seeing some of that. Despite rising recession fears, 30-year bond yields haven’t dropped much, suggesting limited demand at those durations.
Now, at the margins, the Treasury can and does tweak the debt mix…maybe shifting a little from bills to notes, or notes to bonds.
But it’s a balancing act, not something you can radically change overnight.
I’m hoping it’s a 10d chess move where we somehow move to the digital dollar within the next year.
I figure that if we money launder fast enough then we can speedrun world peace ✌️
If 50% of US debt is in bills, why couldn’t the new administration refinance a bunch of that debt into lower interest, longer-term notes or bonds?
Good question. Right now, Treasury bills (which mature in less than a year) make up about 22% of U.S. debt. Treasury notes (2–10 year maturities) make up around 51%.
Each part of the bond market has its own supply and demand dynamics. Bills are basically cash-like instruments—they don’t have interest rate risk and their prices barely move. That’s a big reason there’s always strong demand for them.
You can’t simply shift a huge chunk of short-term debt into long-term bonds (like 20 or 30 year maturities). Those carry a lot of interest rate risk, and the pool of buyers is different (mostly pension funds and insurance companies).
If the Treasury tried to flood the market with long-term bonds, demand might not keep up, which would actually push long-term rates even higher.
We’re already seeing some of that. Despite rising recession fears, 30-year bond yields haven’t dropped much, suggesting limited demand at those durations.
Now, at the margins, the Treasury can and does tweak the debt mix…maybe shifting a little from bills to notes, or notes to bonds.
But it’s a balancing act, not something you can radically change overnight.
Has the share of US debt varied at all across different maturities over the last 25 years?
It has fluctuated. Check out page 23 and 24 here:
https://home.treasury.gov/system/files/221/TreasuryPresentationToTBACQ12024.pdf