The Emergence of 'Regular and Predictable' as a Treasury Debt Management Strategy
Federal Reserve Bank of New York
Economic Policy Review, Vol. 13, No. 1, March 2007
During the 1970s, U.S. Treasury officials revised the framework within which they selected the maturities of new notes and bonds. Previously, they chose maturities on an offering-by-offering basis. By 1982, the Treasury had ceased these tactical sales and was selling notes and bonds on a regular and predictable schedule. This article describes that key change in the Treasury's debt management strategy. The author shows that in 1975, Treasury officials financed an unusually rapid expansion of the federal deficit with a flurry of tactical offerings. Because the timing and maturities of the offerings followed no predictable pattern, the sales sometimes took investors by surprise, disrupting the market. These events led Treasury officials to embrace a more regularized program of regular and predictable issuance - a program they had been using for decades to auction bills. The Treasury's switch to regular and predictable issuance of notes and bonds was widely praised for reducing the element of surprise in Treasury offering announcements, facilitating investor planning, and decreasing Treasury borrowing costs.
Number of Pages in PDF File: 19
Keywords: Debt management policy, Treasury auctions, Treasury securities, federal deficits
JEL Classification: E61, E62, G18, G28Accepted Paper Series
Date posted: March 26, 2007
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