- U.S. gross debt topped $38 trillion in October 2025, pushing interest costs higher.
- Wall Street expects a surge in investment-grade corporate bond issuance in 2026, potentially around $2.25 trillion, led by large tech and AI-related borrowers.
- This corporate supply competes with heavy Treasury issuance for fixed-income capital, pressuring yields and credit spreads.
- With foreign official demand for Treasuries much smaller than in the 2010s, more of the absorption falls on price-sensitive private investors, raising volatility and fiscal-risk concerns.
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The United States reached a gross national debt exceeding $38 trillion in late October 2025—an increase of $1 trillion in just 71 days, the fastest accumulation outside the pandemic., This level contributes to growing interest costs (about $1.21 trillion in FY 2025) and a debt-to-GDP ratio that the Congressional Budget Office projects will rise sharply, potentially hitting ~156% of GDP by 2055 if current trends persist.
Simultaneously, the corporate bond market—particularly investment-grade issuers—is experiencing robust supply. Wall Street projections for IG corporate bond issuance in 2026 are as high as $2.25 trillion, with Big Tech firms such as Amazon, Meta, Oracle, and Alphabet alone issuing tens of billions in the latter half of 2025 for AI infrastructure and other capital spending., As of late 2025, year-to-date IG issuance stood at roughly $1.9–2.0 trillion, up ~9-12% over the prior year.,
This expansion of corporate debt competes directly with Treasury borrowing, as both tap into a limited supply of fixed-income investment capital. Investors—especially private and institutional ones—are increasingly preferring high-quality corporate bonds or securities from leveraged yet creditworthy borrowers, in part due to widening risk spreads, attractive yields, and perceptions that Treasuries may offer less margin., [0news12] With foreign governments now holding less than 15% of Treasuries, the pool of price-sensitive investors becomes more critical.
Strategic implications: Thenational debt trajectory raises borrowing costs, as Treasuries must offer competitive yields relative to corporate alternatives. The Treasury may need to adjust its maturity mix or issue at longer tenor, potentially increasing interest burden and duration risk. The rising share of private and hedge fund holdings introduces volatility risk. And there are open questions about whether current issuance levels are sustainable—particularly if economic growth slows or defaults in the corporate sector increase.
Supporting Notes
- U.S. federal government surpassed $38 trillion in gross national debt in October 2025, adding $1 trillion in just 71 days.,
- In fiscal year 2026, just three months in (from October 2025), the government borrowed $601 billion, though this is $110 billion less than the same period a year earlier.
- Wall Street projections estimate $2.25 trillion in U.S. investment-grade corporate debt issuance for 2026.
- Companies like Alphabet, Meta, Oracle, and Amazon issued nearly $90 billion in bond sales over two months in late 2025 to fund AI/data center expansion. [0news12]
- Year-to-date corporate bond issuance stood at approximately $1.934 trillion as of end-October 2025, up 8.8% year-over-year.
- Foreign governments held more than 40% of U.S. Treasuries in early 2010s; now they hold less than 15%, placing more supply burden on price‐sensitive private investors.
- Interest payments on the federal debt reached approximately $1.21 trillion in FY 2025, about 17% of total federal spending; average interest rate rose from ~1.61% (2021) to ~3.36%.