As U.S. debt soars past $38 trillion, the flood of corporate bonds is a growing threat to the Treasury supply

As U.S. debt surpasses $38 trillion, the surge in corporate bond issuance, particularly from hyperscalers, poses a growing challenge to Treasury supply. Apollo Chief Economist Torsten Slok highlights that the anticipated $2.25 trillion in investment-grade debt this year could drive up rates, raising concerns about the marginal buyer of IG paper. The Treasury Department's efforts to attract investors are complicated by the AI boom, which is driving companies to the bond market for funding. This shift in investor demographics, with a notable decrease in foreign government holdings, could make the U.S. financial system more fragile.