$23 Trillion of U.S. Treasurys Sold by U.S. Government as Issuance Volume Surges

Since the onset of the pandemic, annual issuance of U.S. Treasurys has nearly doubled, growing more than 60% to $27 trillion — “roughly sixfold larger than before the 2008-09 financial crisis.” In comparison to the rapid growth in markets from tech stocks to mortgage bonds with has ended badly in the past, “Treasurys are considered the safest and easiest-to-trade securities on Wall Street,” but the record sale by the U.S. government of $23 trillion worth of Treasurys in 2023 could create an instability within the market that could spread rapidly, worrying many investors. Adding to the concerns of some are new rules that are changing the way trading works; and although they could “help alleviate strains,” they could also “create unforeseen consequences, such as the cash shortages in 2019 and 2020 that snarled trading and boosted interest rates.” Efforts to address concerns of the mounting pile of debt that could leave investors with permanently higher bond yields has prompted the International Swaps and Derivatives Association trade group to “ask the Fed to revive a pandemic-era policy” that would “allow banks to exclude Treasurys and deposits held at the central bank from a regulatory buffer that forces banks to hold capital as a percentage of loans and other assets,” thereby allowing banks “to finance more U.S. debt and open up their balance sheets when markets become strained.”

Source:    https://www.wsj.com/finance/the-27-trillion-treasury-market-is-only-getting-bigger-a9a9d170