How To Understand The Treasury's Upcoming Liquidity Crunch

Earlier we mentioned the NYT’s warning over the deficit, and the back-breaking balloon payments we face when we have to refinance the debt.

This graphic from the article, nicely shows that 36% of U.S. government debt is due within on year. While the Fed is helping with ultra-low interest rates, thus allowing the U.S. government to roll over maturing debt at lower rates, this won’t last forever.

crunch

The implication is that once U.S. interest rates eventually move higher, a large chunk of debt will suddenly have substantially higher interest costs.

Read the detailed article at the New York Times.

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