Record national debt soars over $21 trillion under Trump Administration. Good or bad for S&P 500 dividend yield?.
end of April – to stay within the time frame of the TIC data – the US gross national debt had reached $21.07 trillion. This was up by $1.22 trillion from a year earlier! So who bought this $1.22 trillion of new US Treasuries? Someone must have!
The gross national debt and its surge over the 12-month period are split in two ways:
Debt held “internally” by US government entities rose by $181 billion to $5.73 trillion.
Debt that is publicly traded soared by $1.05 trillion to $15.34 trillion.
This publicly traded debt of $15.34 trillion was held by these entities at the end of April:
15.6% or $2.39 trillion by the Fed as part of its QE
40.2% or $6.17 trillion by foreign entities (see above).
44.2% or $6.78 trillion by Americans, directly or indirectly.
And who bought $1.22 trillion in new debt over the past 12 months?
Not the Fed. Its Treasury holdings fell by $70 billion from the beginning of the QE-Unwind through April. Foreign holdings have only picked up $109 billion over the period. Leaves $1.01 trillion that someone else must have bought over those 12 months.
But who? Mostly American institutional and individual investors, directly and indirectly, through bond funds, pension funds, and other ways.
Yields have risen over the past 12 months, and these “risk free” Treasury yields are now competitive with the average S&P 500 dividend yield. For yield investors, Treasuries are a way to lower their risk profile, while earning higher yields than two years ago. In other words, for many American investors, rising yields have made Treasuries attractive.
