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Today's question: Who buys and holds America's federal debt?
To begin, the chart below shows the growth of US debt (split between public marketable debt and non-marketable Intra-Governmental holdings) and Federal Funds rate since 1970. Public marketable debt is skyrocketing while debt held by Intra-Governmental trust funds continues slowing.
Change - US - Debt - Chart - Quantities
As for the annual change in US debt, the chart below outlines the increasing quantities issued to the public (marketable) debt versus what was purchased via Intra-Governmental trust fund surplus'. Note the diminishing IG versus surging marketable debt.
But thanks to the quarterly publication of the Treasury Bulletin, the Treasury roughly details the changing ownership of US Treasury bonds in four buckets; the Federal Reserve, Intra-Governmental surplus trust funds, foreign held, and domestically held.
Buyers - Debt - Columns - Versus - Columns
Below, which of those four buyers bought and held all that debt from 2009 through 2014 (blue columns) versus 2015 through 2018 (green columns). The changing buyer types before, during, and post QE are quite radical.
Change in holdings from '09 through '14 vs. '15 through '18, per period, plus percentage of issuance purchased per period;
Public - % - Issuance - QE - Chart
This means the domestic public has been left to purchase an unprecedented $3.2 trillion, or 84% of all issuance since QE ended. The chart below details which domestic sources have been adding to their holdings; "other investors" with an assist from mutual funds. A quick rundown, below...
+$300 b or (4%) vs. $2 trillion (51%)?!?
"Other Investors" vaguely includes:
All this can be seen in the Treasury Bulletin December 2018, page 51...Table OFS-2 Estimated Ownership of US Treasury SecuritiesSource; Office of Debt Management, Office of the Under Secretary of Domestic Finance.
Question - Middle - Issuance - QE - Taper
Finally, perhaps the biggest question of all is who is buying all the middle and longer dated issuance? As QE was officially completing its taper in September of 2014, the spread between the 2-10yr and 2-30yr was 200...
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