Apollo's Slok: Interest Rates to Stay Elevated Long-Term Amid Fiscal Pressures
Nashnova编辑部
Apollo chief economist Torsten Slok argues that surging U.S. debt, outsized deficits, and tech-giant bond issuance crowding out Treasury demand all point to one conclusion — interest rates will stay higher for longer, repricing virtually every asset class.
How much has the U.S. actually borrowed?
Since 2006, total federal debt has grown by $32 trillion, while nominal GDP rose only about $19 trillion over the same period.
This means → debt nearly quintupled while the economy less than doubled — borrowing has far outpaced earning.
Publicly held debt as a share of GDP has climbed from under 40% to roughly 100%, the equivalent of an entire year's output just to cover what is owed.
Will the outlook improve?
The Congressional Budget Office (CBO) projects that, on the current policy path, publicly held debt will rise from 100% to 175% of GDP.
The Office of Management and Budget (OMB) forecasts deficits holding near 5% of GDP for years ahead; the actual run rate is already close to 6%.
In plain terms = deficits this large normally appear only during recessions — yet the U.S. economy is at full employment, spending at crisis levels without a crisis.
Why is someone saying "stop suppressing rates"?
Investor Stanley Druckenmiller argued in *The Wall Street Journal* that the Treasury should stop using buyback operations to hold down long-end yields and instead confront the underlying deficit.
He called long-term Treasury yields "the last enforcer of fiscal discipline in America."
This means → if long-term rates are artificially suppressed, the market loses its final tool for signaling that government spending is out of control.
What does this mean for investors?
Slok's conclusion: fiscal deficits, potential Fed rate-hike paths, and mega-cap tech bond issuance crowding out Treasury demand combine to keep rates higher than previously expected.
This reflects a deeper judgment — "higher for longer" is no longer just a Fed talking point but a structural reality driven by fiscal math.
Whether long-end yields can truly serve as a fiscal constraint will be the key variable in assessing U.S. debt sustainability.
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