Let’s hope foreign non-official sector wants to hold on to US government debt.

Figure 1: Federal debt held by the public as share of GDP (black line), foreign non-official sector (blue bar), foreign official sector (red bar), Federal Reserve Banks (teal bar), and other holdings (tan bars). Source: Treasury via FRED, BEA, and author’s calculations.

The foreign official sector (central banks) is pretty sated with Treasurys. Fed Chair designate Walsh wants to shrink the teal portion. We’ll see how malleable his views on this point are as long term rates rise (as I think they will).