The trillion US dollars of newly issued US debt has been robbed! Will the Federal Reserve be forced to stop quantitative tightening?

As the US Treasury issues a lot of short-term bills in the market,Investors are scrambling to buy U.S. Treasuries。

In the past three months,As the U.S. federal deficit ballooned, newly issued treasury securities worth more than $1 trillion were snapped up.As its yield soared above 5%, more and more small investors flocked to the market.

According to foreign media reports, at the weekly auction in mid-August, so-called non-competitive bidders, those who do not submit competitive bids but accept them directly,Purchased a record $2.898 billion 6-month note at a 5.29% yield。

This figure is more than five times higher than before the Federal Reserve launched its rate hike in March 2022The Federal Reserve's interest rate hikes over the past year have put upward pressure on borrowing costs

Industrial foreign exchangeDemand for U.S. short-term bonds was so high that the balance sheets of primary dealers, which act as intermediaries in the bond market, plummeted from a record $116 billion in July to around $45 billion in August.

The strong demand for Treasury bills comes as the Federal Reserve has stopped buying Treasuries and has been shrinking its balance sheet, known as quantitative tightening, in a move that will allow other buyers in the market to fill the void.

Economists at the St. Louis Fed said,In fact, America's debt binge could force the Federal Reserve to stop quantitative tightening in order to prevent the financial system from becoming unstable.However, with more and more small investors flooding into the market, the Fed does not seem to need to worry about this issue for the time being. That is, if there are enough buyers to fill the gap, the Fed will not be forced to stop quantitative tightening.

It is worth mentioning that,Up to $7.60 trillion of interest-bearing U.S. public debt matures within a year, representing 31 percent of all outstanding government debt.