Implications of the Treasury Debt Paydown for Federal Reserve Open Market Operations

In 2000, in 20 buyback operations, the Treasury purchased a total of $30 billion of par value marketable debt that it had previously issued, with maturities ranging from 12 to 27 years. In each of the first two quarters of 2001, it will purchase, in two buyback operations per month, about $9 billion par value of outstanding Treasury debt. In line with the buybacks, the Treasury has reduced its issues of new securities, but it has scheduled regular reopenings of auctions of additional amounts of a previously issued security (instead of issuing a new one) in order to maintain adequate sizes of individual maturities. The reopening of every other auction of five-, ten-, and thirty-year maturities is smaller than the previously auctioned security. In addition, the Treasury has reduced the issue sizes of two-year notes and inflation-indexed securities. It has eliminated the April auction of the thirty-year inflation-indexed bond, and one-year bills following the February 2001 auction.