Federal finance is in somewhat of a delicate dance, as the Treasury Department must adjust its debt management operations while its largest customer, the U.S. Federal Reserve embarks on tightening monetary policy. In a new insight, Director of Fiscal Policy Gordon Gray walks through the quarterly refunding process—a forum for the regular exchange of views and information among Treasury officials—and uses this event to assess the institutional outlook for federal finance.

Key points:

• The U.S. Treasury market is the largest and deepest of any single issuer in the world, while U.S. Treasury securities are an essential benchmark in global financial markets.
• The market faces some uncertainty, as the Treasury’s largest customer of late, the Federal Reserve, ceases to purchase and ultimately reduces its Treasury holdings.
• As Treasury’s debt managers grapple with this challenge, the quarterly refunding process will serve as a crucial forum for ensuring regular and predictable debt issuances.

Read the analysis