Even if the Federal Reserve delivers on the over 200 bps of interest-rate cuts expected by the market, it won’t significantly alter the rapidly climbing interest bill on government debt, making a rise in issuance and structurally higher longer-term yields more likely.
When looking at charts every day, there’s the occasional time when – even when you know the broad theme behind it – what you see still shocks you. That applies to the government’s interest bill. It’s well known it’s rising as issuance has mushroomed, but in the next few years it’s expected to make at least 60-year highs relative to tax revenues.
