The Impact of U.S. Treasury Issuance and the Role of Rate Cuts

The Federal Reserve’s monetary policies have long been a subject of debate, and with the recent 50 basis point rate cut, the conversation has shifted once again toward understanding the broader economic implications. One of the most important elements in this debate is the ever-growing U.S. debt, specifically the massive amounts of U.S. Treasuries being issued and rolled over to service that debt. As Luke Gromen explained in a recent interview, the challenges surrounding the fiscal position of the U.S. government have become more apparent, and the solutions being proposed, such as additional rate cuts, have broader consequences that demand careful consideration.

Treasury Issuance: An Accelerating Cycle

The sheer size of the U.S. Treasury market has raised concerns for many years. As U.S. debt levels continue to grow, so does the reliance on rolling over massive amounts of debt each week. Gromen pointed out that in 2013, the U.S. Treasury was rolling over approximately $100 billion a week in gross issuance. By 2018, that number had already doubled to $200 billion per week. Fast forward to 2024, and the gross issuance now exceeds $500 billion per week, representing a compound annual growth rate (CAGR) of over 16% over the past