Research preview

U.S. public debt is projected to reach 175 % of GDP within three decades, a level that could reshape market dynamics and risk premia. For quantitative traders, understanding how sovereign debt trajectories affect asset returns, volatility, and financing costs is essential for building resilient models. The Debt‑to‑GDP Ratio as a Macro Indicator The debt‑to‑GDP ratio aggregates the total nominal government debt and compares it to the size of the economy. A rising ratio signals that debt is growing faster than output, which can increase the probability of fiscal stress. Historically, periods when the ratio climbed above 100 % were accompanied by higher sovereign yield spreads, reflecting greater perceived default risk....