U.S. debt risk rises as demand for short-term Treasuries surges

Huo Xing Finance reports that on August 16, the U.S. Treasury’s reliance on short-term debt is increasing: currently, Treasury bills account for 21% of the tradable U.S. debt securities market, a level nearing the highest since 2020, when the federal government significantly increased borrowing to respond to the pandemic. This figure far exceeds the 10–15% range observed between 2012 and 2019. By comparison, during the 2008 financial crisis, this proportion reached approximately 34%. Meanwhile, the U.S. government is increasingly relying on short-term Treasuries to meet its growing borrowing needs rather than long-term bonds. If the U.S. Treasury continues issuing long-term debt at the current pace before fiscal year 2027, Treasury bills could account for 25% of total debt—the highest proportion since 2004. However, this approach heightens the government’s exposure to short-term interest rate volatility; if rates continue to rise or increase again, debt servicing costs could become unsustainable. The U.S. debt crisis is fully unfolding.