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This might be a dumb question... Are most of the treasuries we've already sold - e.g. I assume that's what $29 trillion in debt means - already fixed coupon rat

This might be a dumb question... Are most of the treasuries we've already sold - e.g. I assume that's what $29 trillion in debt means - already fixed coupon rate from the govt? I know it trades on market which inverse reflects real return. Just googling I found floating rate notes, which seem to respond like an adjustable mortgage would. But they seem small and short term. But I do understand we have a deficit and have to sell more treasuries every year. Maybe that would be a driver to have a more even budget. But from my perspective Dems pass policy that a large % of the country likes. Raise taxes to pay for it. Republicans then win election and repeal and cut taxes but leave said popular policy. next Dem majority raises taxes but probably not even above the baseline before Rs cut it (e.g. the current draft reconciliation bill doesn't actually raise taxes much at all. it's crazy to me how cheap some of this stuff is when you take legit CBO scored credit for instance not handing out billions to pharma)

missedthecue 5y ago
Your thinking is correct, the only thing you're missing is how frequently the treasury rolls over debt into new debt. Most debt isn't 20 or 30 year bonds. Take a look at the link below and see how much of the total outstanding debt is in t-bills. These are instruments with a duration of less than a year. That means throughout the year, the treasury has to issue new debt to pay off the old debt, essentially refinancing constantly. This makes the government particularly vulnerable to interest rate risk. https://www.sifma.org/resources/research/us-treasury-securities-statistics/ https://www.sifma.org/resources/research/us-treasury-securit... During the previous admin, there was talk of issuing a 100 year bond while rates were so low in order to reduce some of this risk, but nothing ever materialized. I'm not sure if this idea is on the present administration's radar at all. https://www.reuters.com/article/us-usa-economy-mnuchin-idUSKCN1VX2SO https://www.reuters.com/article/us-usa-economy-mnuchin-idUSK...
- dillondoyle 5y ago
  Thanks I didn't know that!

missedthecue 5y ago

Your thinking is correct, the only thing you're missing is how frequently the treasury rolls over debt into new debt. Most debt isn't 20 or 30 year bonds. Take a look at the link below and see how much of the total outstanding debt is in t-bills. These are instruments with a duration of less than a year. That means throughout the year, the treasury has to issue new debt to pay off the old debt, essentially refinancing constantly. This makes the government particularly vulnerable to interest rate risk. https://www.sifma.org/resources/research/us-treasury-securities-statistics/ https://www.sifma.org/resources/research/us-treasury-securit... During the previous admin, there was talk of issuing a 100 year bond while rates were so low in order to reduce some of this risk, but nothing ever materialized. I'm not sure if this idea is on the present administration's radar at all. https://www.reuters.com/article/us-usa-economy-mnuchin-idUSKCN1VX2SO https://www.reuters.com/article/us-usa-economy-mnuchin-idUSK...

dillondoyle 5y ago
Thanks I didn't know that!