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The Treasury is walking a tightrope on U.S. debt by relying so much on short-term rates that are at the mercy of a suddenly very hawkish Fed
['Jason Ma', 'July', 'Min Read']
Yahoo News - Latest News & Headlines
To keep interest costs on $39 trillion in debt from exploding further, the Treasury Department has relied heavily on short-term securities that have lower yields than longer-term bonds.
In fact, about 85% of debt issuance over the past few years has been Treasury bills that mature in a year or sooner, according to Capital Economics.
As a result, 20% of outstanding federal debt will come due in the next four months—and that share with hit 33% within a year.
Her warning came despite the latest consumer price index coming in below expectations, easing fears that the Fed might have to hike rates later this month.
Still, the overall trend has been a more hawkish Fed as the economy has remained resilient, with half of policymakers predicting rate hikes soon.