Citadel Securities' Esposito says US deficit is a 'ticking time bomb'
NEW YORK: The US government's growing debt pile is a "ticking time bomb" and how the Trump administration reacts to this crisis is going to be "super important", Citadel Securities President Jim Esposito said on Thursday.
Several other leaders of the financial services industry have issued similar warnings about the current US deficit in recent weeks. Earlier in June, JPMorgan Chase CEO Jamie Dimon said the US national debt is a "big deal" that could create a "tough time" for the bond market that causes spreads to widen.
"The stock of debt and the budget deficit is a ticking time bomb. No one is smart enough to predict when exactly it will rear its ugly head. We've been talking about this for more than 20 years, so in some ways the market's gone into complacency, but over a multi-year period we can work this out," Esposito said at the Piper Sandler Global Exchange & Trading Conference.
Shifting US economic policies have sent bond markets tumbling in recent weeks. In May, ratings agency Moody's downgraded the US sovereign credit rating.
Long-dated bonds have been under pressure due to deficit concerns, with investors delivering a tepid response to a 20-year auction in May and sending the 30-year bond yield to its highest level since October 2023. Higher bond yields can translate into higher borrowing costs for consumers, businesses and governments.
Citadel Securities, a market-making behemoth that was founded by hedge fund billionaire Ken Griffin, plans to double down on cryptocurrency trading this year under a new regulatory framework.
"This year you'll see us getting more active providing liquidity on specific crypto exchanges. So that's a part of our strategic plan. I think we'll execute on that in this calendar year, like everybody else," said Esposito.
"We're excited by the prospects of the SEC (US Securities and Exchange Commission) coming out with the rule set. So crypto is definitely a space we're going to get bigger in, and we're excited about the prospects," he added.
The market volatility this year has boosted the fortunes of large market makers like Citadel Securities and Jane Street. During the first quarter of 2025, Citadel Securities' net trading revenue surged 45 per cent to $3.4 billion, while its profit jumped 70 per cent - a record for the firm, according to people familiar with the matter.
"The number of growth opportunities that lie in front of us is almost unlimited. In our core businesses, our equity business at the moment is a bit too skewed towards the US at the expense of the rest of the world - so Europe is a very big growth opportunity for us," Esposito said.
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