Supercycle in U.S. Debt Helps to Curb Treasury Borrowing Costs

The U.S. government’s debt boom seems to be creating a self-perpetuating cycle of demand, even before March’s surge in buying. That cycle is delaying any comeuppance for the U.S. Department of the Treasury as it contemplates its next trillion dollars of annual borrowing. But how?

As Treasury issuance outstrips crisis-era records, the rising share of government bonds in market-weighted fixed-income indexes is pulling in more global investors. The benchmark Bloomberg Barclays U.S. Aggregate Index is skewed increasingly toward government securities, with Treasuries now accounting for 39 percent, up from 25 percent a decade ago. (The index is owned by Bloomberg LP, the parent of Bloomberg Markets.)