FT's Wigglesworth Warns the $12 Trillion Repo Market Sits Under US Debt

The repo market, barely a few trillion dollars in 2008, has ballooned past $12 trillion — and it now sits directly beneath America's $40 trillion national debt. Robin Wigglesworth, editor of the Financial Times' Alphaville blog, calls that arrangement "profoundly dangerous."

Wigglesworth's new book, A Fabulous Debt, covers a thousand years of bond market history, from medieval Venice to the present. It follows his 2021 debut Trillions: How a Band of Wall Street Renegades Invented the Index Fund and Changed Finance Forever, which the Wall Street Journal called a "magisterial, delightfully written history."

Publishers Weekly called the new book "a must-read for anyone interested in global finance," praising Wigglesworth's "Dickensian eye for memorable events and characters."

"This stuff is important," Wigglesworth said in an interview from his home office in his native Norway. "But it's also interesting and fun."

A thousand years of borrowing

The story begins in medieval Venice, where bonds originated as a way for an encircled lagoon nation to fund warfare. From there, Wigglesworth traces the bond market through what he cheerfully calls a "stunning number of weird, obscure wars," including the War of Jenkins' Ear, financed through war bonds after rumors spread that the Spanish had cut off an English sea captain's ear.

Napoleon's defeat had a bond element at its center, Wigglesworth argued. "It wasn't Horatio Nelson or the Duke of Wellington," he insisted. "The only reason England could fight for so long against a far larger enemy and subsidize all their allies in Portugal and Prussia and so on was because they could basically fund themselves to infinity and beyond with this massive consol market, whilst France couldn't because they just weren't creditworthy."

Wigglesworth found a young Alexander Hamilton making the same diagnosis two centuries ago, in a letter he unearthed via a mention in Ron Chernow's biography. Hamilton "basically wrote a letter saying, basically, England's great power is its consol market — credit is actually what makes Britain able to feed, clothe and dispatch thousands of soldiers around the world," Wigglesworth said. "I thought it was quite cool." Hamilton grasped this, Wigglesworth added, a lot earlier than many people in Britain did.

The Erie Canal — which Wigglesworth called the "genesis moment" for the municipal bonds market — is "one of the great examples in human history that shows what you can achieve by, you know, borrowing money, investing it wisely in smart projects." Before the canal connected the Great Lakes to the Hudson, "there was an argument to be made that Philadelphia was really the most likely financial hub." He noted that Richard Sylla, "the granddaddy of American financial historians," agrees the Erie Canal gave the northern American states their shape.

Bonds were "what united the United States," Wigglesworth argued. Once Revolutionary War state debts were assumed as federal debt and refinanced with the first Treasury bonds, that created a community of "creditor citizens." A similar process took place among Italian city-states and in the U.K. "We kind of think of history sometimes is inevitable, like A equals B equals C," he said. "But like, it could have gone in a very different way."

The railroad buildout that followed, which he compares to today's data-center frenzy, had a simple driver. "Nobody built more railways than the Americans," Wigglesworth said. "That's partially because it's a big country. But also [it's] because the Americans could."

The fragility question

Wigglesworth had considered closing the book on bond ETFs, a natural sequel to Trillions. He landed somewhere darker: whether the bond market — the "hidden wiring of the world," as he puts it — can survive contact with the modern financial system.

On America's $40 trillion national debt, he splits the question in two. No, America won't go bankrupt. "I'm not saying it's a 0% chance … but it's a 0.01% chance, and it's high now and it will probably keep going higher," he said.

His alarm centers on who holds the debt. "My biggest worry is some of the fragility around the changing players, like who's active in Treasuries and how it's financed," Wigglesworth said. Foreign central banks, the Treasury market's steadiest postwar customers, have "tiptoed" out for a couple of decades. Hedge funds running leveraged trades have replaced them. "I worry that the growing heft of far more price-sensitive and extremely leveraged players in the Treasury market makes that market more volatile, more prone to sudden hissy fits," he said, describing something akin to high blood pressure in an aging patient.

The mechanics matter. Borrowed money now flows through the overnight repo market, which most people haven't heard of, to their detriment. "What killed Bear Stearns, what killed Lehman, wasn't necessarily just toxic assets and all that jazz," Wigglesworth said. "It was a repo run."

The numbers back him up. The Treasury cash-futures basis trade has grown to roughly $830 billion as of last September, according to a June 2026 Federal Reserve research note — about double its pre-pandemic peak in early 2020, and now more than a third of hedge funds' total long Treasury exposure. A separate paper presented at a Brookings conference concludes the basis trade is "inherently fragile" by construction.

"In practice we're all competing with the U.S. government for money," Wigglesworth said, noting that spikes in Treasury yields ripple across the global economy, felt even in Norway.

He recalled Warren Buffett's observation at Berkshire Hathaway's virtual annual meeting in April 2020: "We got to the point where the U.S. treasury market, the deepest of all markets, got somewhat disorganized. And when that happens, believe me, every bank and CFO in the country knows it. And they react with fear, and fear is the most contagious disease you can imagine. It makes the virus look like a piker."

"The entire global financial system rests on Treasuries because it is the most liquid, the most dependable, the most solid," Wigglesworth said. "And that's kind of how we've ordered the global economy, by accident almost. But that bedrock, I fret, is a little bit more brittle than commonly appreciated."

"You want your bomb shelter, the Treasury market, you want that to be safe as hell," he said. "And when your bomb shelter starts like making weird noises, it freaks people out that much more." With the repo market and the national debt both still growing, that noise is the question his thousand-year history leaves unanswered.