Financial market implications of the Federal debt paydown

Arbeitspapier

U.S. Treasury securities fill several crucial roles in financial markets: they are a risk-free benchmark, a reference and hedging benchmark, and a reserve asset to the Federal Reserve and other financial institutions. Many of the features that make the Treasury market an attractive benchmark and reserve asset are likely to be adversely affected by the paydown of the federal debt, and recent developments suggest that this may be happening already. Market participants are responding by moving away from Treasuries as a reference and hedging benchmark toward agency debt securities, corporate debt securities, and interest rate swaps. The Federal Reserve is taking steps to adjust its portfolio and should be able to do so with minimal implications for monetary policy.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Staff Report ; No. 120

Classification and Topics

• Classification: Wirtschaft ; National Debt; Debt Management; Sovereign Debt ; Information and Market Efficiency; Event Studies; Insider Trading ; Monetary Policy ; Asset Pricing; Trading Volume; Bond Interest Rates ; Interest Rates: Determination, Term Structure, and Effects
• Subject: Treasury market, benchmark, reserve asset, liquidity ; Schatzpapier ; Öffentliche Schulden ; Gesamtwirtschaftliche Liquidität ; Finanzmarkt ; Wertpapieranalyse ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fleming, Michael J.
• Event: Veröffentlichung
• (who): Federal Reserve Bank of New York
• (where): New York, NY
• (when): 2001

Further information

• Handle: http://hdl.handle.net/10419/60722
• Last update: 10.03.2025, 11:44 AM CET