A Sobering Look At The Structure Of US Treasury Debt

Preface from Doug: Peter Williams is a private investor trading in equities, commodities and currencies based in Australia. The text below is from an email I received yesterday with the accompanying charts.

After following US market fundamentals for the last two years I have wanted to know more about how the US Treasuries work. The charts below show an alternative view on the repayment schedule of principal for US Treasury Notes currently on issue.

Using data from the US Treasury bond auction results, I sorted and grouped all the auction results first by maturity date and then by term. When you plot this as a bar chart, each bar represents an individual auction (and hence the value of that auction is the height of the bar), with different colours used to represent the various terms (2, 3, 4, 5 years, etc). This gives us a bird’s eye view of how the US Treasury has positioned all the debt issued. What it means is everything to the left of the data date (‘now’) has matured (expired/retired) and everything to the right is the forward liability.

We can cumulatively add these bars up to give us a debt maturity cash flow.

debt treasuries

To appreciate Chart 1 (the current debt position), and the recent changes to the US debt structure, I have created a second chart showing what the debt looked like at the beginning of 2008 (prior to the Great Financial Crisis).

debt treasuries

A comparison of the two charts shows the obvious trends and how much and where the US Treasury has placed the debt obligations by term and maturity date. Essentially these charts create a cash flow schedule for the US Treasury — what and how much comes due for repayment in the future.

Some rough numbers of debt issued in US Treasury Notes are as follows:

  • Issued in 2008 calendar year = US $919 Billion
  • Issued in 2009 calendar year = US $2.00 Trillion
  • Issued in 2010 so far = US $1.58 Trillion
  • Total issued since Jan 2008 = $4.50 Trillion

When you zoom in on the maturing (outstanding) debt, you can see that there is plenty of wriggle room (empty space) for more debt to be positioned.

debt treasuries

These charts show the debt legacy of 2009/10 now facing future generations. The questions are clear: How and when is the US going to produce a surplus to pay down the debt?

Note: These bars represent the principal only amounts of issued Notes, and do not indicate any amounts payable periodically of the yields.


This post previously appeared at DShort.com >

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