US Faces $9 Trillion Treasury Maturity Wave Amidst Unsustainable Fiscal Path, Apollo Economist Warns

Kenneth Auchenberg recently highlighted critical concerns regarding the United States' fiscal trajectory, pointing to an analysis by Apollo Global Management's Chief Economist Torsten Slok. The tweet, which linked directly to Apollo's June 2025 report, underscores a challenging outlook for the US economy, characterized by an unsustainable fiscal path, rising long-term interest rates, burgeoning Treasury auctions, and potential implications for the dollar.

The core of the concern lies in the escalating national debt and its servicing costs. The Congressional Budget Office (CBO) projects that federal debt held by the public could reach 156% of GDP by 2055, a significant increase from current levels. This long-term trend is exacerbated by persistent budget deficits, which are expected to exceed $1 trillion annually for the next decade.

A pressing short-term challenge is the sheer volume of maturing government debt. Approximately $9 trillion in US government debt is set to mature over the next 12 months, necessitating frequent and large Treasury auctions. Data from Apollo indicates that Treasury auction sizes increased by an average of 27% across the yield curve in 2024, reflecting the growing need for the government to roll over existing debt and finance new spending.

The rising debt levels directly impact the nation's interest payments. Currently, debt servicing costs account for 13% of total government outlays, with daily interest payments soaring from $1 billion before the pandemic to $3 billion today. This substantial allocation to interest payments strains the federal budget, diverting funds from other critical areas.

The Federal Reserve's monetary policy also plays a pivotal role. The Fed kept the federal funds rate steady at 4.5% in March 2025, following earlier rate reductions. While the Fed still projects two rate cuts for 2025, its forecasts for GDP growth have been lowered, and core inflation projections for 2025 have been raised to 2.8%, partly due to the impact of tariffs. Torsten Slok suggests that tariffs are keeping interest rates higher for longer, increasing the chance of a US recession to 25% over the next 12 months, and expects only one Fed rate cut in 2025.

The outlook for the dollar is also intertwined with these fiscal and monetary dynamics. While the US economy has shown resilience, a slowdown could lead to a decline in the dollar's value. Foreign ownership of US Treasuries, particularly by countries like China, has seen a decline, while domestic investors, including households and pension funds, have increased their holdings. Apollo's analysis concludes that while a sudden debt crisis is unlikely, the most probable outcome is a gradual increase in long-term rates and a steepening of the yield curve.