Treasury Bond Market Intervention & Yield Curve Lab
Debt Management Strategy, T-Bill Tilts, Buyback Operations & Term Premium Dynamics
Sim Engine: Active
Policy Preset Stances
Issuance & Operational Levers
32%
15% (Historic Avg)20% TBAC Cap50% Max Short
$30B
$0B (Off)$30B Current$100B Shock
Shorten (-1.2y)
-3.0y (Suppress)0.0 Neutral+3.0y (Lengthen)
Discretionary Debt Management: Treasury shifts supply from coupons to T-bills, removing interest rate risk from dealer balance sheets and depressing long-end term premium.
2-Year Yield
4.21%
10-Year Yield
4.28%
2s10s Spread
+7 bps
Term Premium Δ
-17 bps
Dealer Strain
Moderate (56)
Yield Curve Comparison (1M to 30Y)
Baseline Market
Simulated Policy
Tenor
1M
3M
6M
1Y
2Y
3Y
5Y
7Y
10Y
20Y
30Y
Base
4.40%
4.35%
4.30%
4.22%
4.15%
4.18%
4.25%
4.35%
4.45%
4.72%
4.68%
Sim
4.46%
4.42%
4.36%
4.27%
4.21%
4.21%
4.20%
4.23%
4.28%
4.52%
4.46%
Δ (bps)
+6
+7
+6
+5
+6
+3
-5
-12
-17
-20
-22
Treasury Debt Management Authority
Under 31 U.S.C. Chapter 31, the Treasury Secretary has statutory jurisdiction over auction sizing, maturity selection, cash balances (TGA), and regular debt buyback operations to maintain market liquidity without setting target yields.
Bill vs Coupon Mix: Determines systemic duration supply absorbed by primary dealers.
Liquidity Buybacks: Buys off-the-run bonds financed by bill issuance to clear dealer balance sheets.
TBAC Consultation: Regular, predictable issuance framework advising standard non-discretionary paths.
Federal Reserve Monetary Policy Remit
Under the Federal Reserve Act, the FOMC conducts monetary policy through the federal funds rate and secondary market balance sheet asset purchases (QE/QT) to pursue maximum employment and price stability.
Rate Policy: Anchors front-end expectations (1M to 2Y yields).
Quantitative Easing: Direct secondary purchases funded by creating bank reserves.