U.S. National Debt Soars to $36 Trillion: What It Means for Your Portfolio

Record-Breaking National Debt

The U.S. national debt has reached a staggering $36 trillion as of late 2024, doubling over the past 15 years and drawing increased attention from market observers. While politicians have largely overlooked this issue during the 2024 presidential campaign, capital markets are taking notice.

Rising Interest Rate Challenge

Rising interest rates have exacerbated the debt problem, making servicing the debt more expensive. The average interest rate on federal government debt has jumped to 3.30% as of October 2024, more than double the rate paid in 2020. This increase in borrowing costs has significant implications for both government spending and investment markets.

Changing Treasury Buyer Dynamics

The shifting landscape of Treasury debt buyers presents another challenge. The Federal Reserve is winding down its balance sheet holdings, while foreign buyers like China and Japan have reduced their Treasury purchases. This has led to individual investors and mutual funds taking on a larger role in purchasing government debt.

Current Market Assessment

The debt situation, while concerning, remains manageable in the short term according to experts. However, the long-term sustainability of rising debt levels worries investors. The debt-to-GDP ratio has reached 123% in late 2024 and continues to climb, raising questions about future economic implications.

Investment Strategy Implications

For investors, these developments suggest considering overweight positions in equities to capitalize on continued economic growth, while maintaining a modestly lower-than-neutral weighting in fixed income. However, Treasury securities should still play an important role in a diversified portfolio as markets navigate this evolving landscape.

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ICM Property Partners is our feature fund for the week

Demographic shifts, evolving tenant preferences, and market valuations are constantly changing the real estate landscape. ICM Property Partners stays on top of these trends, continuously adjusting our portfolio to maximize investor returns.

Investor-Friendly Structure

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Here is a link to their web site: 

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To book your consultation, email me at russ.zapotichny@axcesscapital.com or use my Calendly Link.

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Preserving your assets is paramount, which is why our strategy focuses on delivering consistent returns that outpace inflation while remaining resilient to market volatility.

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Protect Your Portfolio: Exclusive Opportunity for a Complimentary Review 

As markets continue to evolve, ensuring your portfolio has the right protection and growth strategies becomes increasingly important.

I'm extending a special invitation for a comprehensive portfolio evaluation with my experienced investment team.

During this valuable session, we'll provide:

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To book your consultation, email me at russ.zapotichny@axcesscapital.com or use my Calendly Link.

Disclaimer

“Axcess Capital Advisors Inc. is registered as an Investment Fund Manager and Restricted Portfolio Manager in Alberta and as an Exempt Market Dealer in British Columbia, Alberta, Saskatchewan, Manitoba, and Ontario. Distribution and the use of any information related to this post is unauthorized and prohibited. Exempt market products (Private Investments) made available through Axcess Capital Advisors Inc. my registered exempt market dealership. This information does not constitute a solicitation for sale or purchase of securities.  This is not an offering of securities. Offerings are made pursuant to an offering memorandum and only available to qualified investors in jurisdictions of Canada who meet certain eligibility or minimum purchase requirements. The risks of investing are outlined and detailed in the applicable offering memorandum, and you must review the offering memorandum in detail prior to investing. Investments are not guaranteed or insured, and the value of the investments may fluctuate.”