Let's cut right to the bottom line. A touch over 22% of US Federal debt matures in one year (2011). A touch less than 50% of total Federal debt matures within three years. And as you eyeball the debt maturities of 2011 through 2013, we believe it's fair to say that the average maturity of just shy of half of “official” US total Federal debt is roughly a year and one half. Trying to be conservative, with one year Treasury paper near 30 basis points in cost and three year paper near 100 bp, we believe it's fair to say that a bit less than one half of total publicly traded (excluding intergovernmental transfers) Federal debt has an average cost of capital of about 55 basis points, again remembering that in weighting these numbers the bulk of maturities occurs w/in 1 year. And without question this is a gift of Fed interest rate engineering at the theoretical zero bound. The cost of servicing US Federal debt interest payments has been hooked up to a Fed sponsored ventilator, if you will, as it's certainly not breathing on its own. So the much longer term thematic investment question becomes, just when will the eventual "weaning period" from the zero bound begin and what will be the character of the patient when this occurs?
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