Office of Debt Management

Overview of Treasury’s 

Office of Debt Management 
Debt Management at the Treasury

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Secretary

Deputy Secretary

Under Secretary 

for Domestic Finance

Assistant Secretary 

for Financial Markets

Deputy Assistant 

Secretary

Federal Finance 

Office of 

Debt Management

Fiscal Assistant Secretary

Bureau of the Fiscal 

Service

Office of Fiscal 

Projections

Develops the cash 

balance forecast 

used by the Office of 

Debt Management 

to make financing 

decisions Operations: runs the 

debt auction and 

accounting systems

Responsible for 

developing policy 

related to 

government 

financing
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Treasury’s debt management policy is independent from the Federal Reserve System’s monetary policy 

decisions.

Treasury’s Mission

 Treasury’s mission is to maintain a strong economy and create economic and job opportunities by 

promoting the conditions that enable economic growth and stability at home and abroad, strengthen 

national security by combatting threats and protecting the integrity of the financial system, and 

manage the U.S. Government’s finances and resources effectively. 

Federal Reserve System Responsibilities

 The Federal Reserve System is the central bank of the United States and conducts monetary policy

 The Federal Open Market Committee sets monetary policy by choosing a federal funds rate target and 

authorizes open market operations to achieve that target

 The Board of Governors oversees the operation of Federal Reserve System and is responsible for the 

discount rate and reserve requirements

Federal Reserve Banks Act as Treasury’s Fiscal Agent

 Receives tenders in Treasury auctions and buybacks

 Maintains marketable Treasury securities in book-entry form

 Maintains the Treasury's checking account (i.e., the “Treasury General Account ”)

 Maintains the relationship with the primary dealers

 Conducts Treasury's foreign exchange transactions

Treasury and the Federal Reserve System
Objective 

 Fund the government at the least cost to the taxpayer over time

Strategies

 Offer high quality products through regular and predictable issuance

 Promote a robust, broad, and diverse investor base

 Support market liquidity and market functioning

 Keep a prudent cash balance

 Maintain manageable rollovers and changes in interest expense

Constraints

 Uncertainty – legislative commitments, macro-economic forecast errors, technical modeling 

factors all create uncertainty in deficit forecasts

 Size – Treasury is too large an issuer to behave opportunistically in debt markets 

Policy Outcomes

 Treasury is a regular and predictable market participant, not a market timer 

 Treasury doesn’t react to current rate levels or short-term fluctuations in demand

 Treasury requires flexibility to respond to uncertainty – to rapidly raise cash or pay down debt 

– shorter maturities provide more flexibility

 Treasury seeks continuous improvement in the auction process

 Treasury strives for transparency and regularly consults with market participants

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Treasury Financing
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Least Cost

 Interest expense is an important component of the federal budget.

 For a given amount of debt issuance, the expected relative cost – over time – of 

issuing at different points on the curve matter.

Regular and Predictable

 “Regular and predictable” issuance argues against being opportunistic.

 Issuance experience, complemented by surveys of the primary dealers, informs 

Treasury’s view on the speed of any adjustment to auction sizes.

 Greater liquidity reduces Treasury’s funding costs over the long-run.

 However, limiting the speed of adjustment of issuance implies slowly adjusting 

to shifts in expected cost.

Least Expected Cost Over Time and

Regular and Predictable
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Determinants of Treasury Borrowing Needs

 Volume of Maturing Issues (“Rollover”)

 Budget Deficit/Surplus

 Changes in Cash Balance

Debt Management Policy Tools

 Auction Sizes

 Auction Frequency

 Security Offering Schedule

 Buybacks 

 Auction Regulations

 Market Monitoring, Consulting, and Surveillance

Borrowing Needs & Debt Management Tools
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 A liquid, efficient market for Treasury securities is central to the financial system.

 Historically, a liquid market garners a liquidity premium for a security, which leads to 

greater cost savings.

 The private sector uses Treasury securities as a benchmark for issuance.

 A minimum level of issuance can help to maintain a liquid market at all points on the 

curve.

Market Functioning
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Marketable 

 Can be traded in the secondary market 

 Sold at auction, rates set via competitive bidding

 e.g., Bills, Notes, Bonds, TIPS, and FRNs 

 Zero coupon bonds are created by market participants and are not issued 

directly by Treasury

Non-Marketable

 Can not be traded and can be sold only to Treasury

 Sold to investors by subscription, rates set administratively 

 e.g., Savings Bonds, State and Local Government Series

Updated data on the distribution of Treasury securities outstanding can be 

found at:

 https://fiscaldata.treasury.gov/datasets/monthly-statement-publicdebt/summary-of-treasury-securities-outstanding

Classes of Treasury Securities
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Bills – Maturities less than 1-year, sold at competitive auction at a discount to par. 

Returns par at maturity.

Notes – Maturities from 1-year to 10-years, sold at competitive auction, semi-annual 

coupon payments.

Bonds – Maturities > 10-years, sold at competitive auction, semi-annual coupon 

payments.

Treasury Inflation-Protected Securities (TIPS) – Maturities of 5-, 10- and 30-years. Sold 

at competitive auction. Semi-annual coupon payments. TIPS have a “Real Rate 

Coupon.” Principal is indexed to NSA-CPI.

Floating Rate Notes (FRN) – 2-year maturity. Sold at competitive auction; quarterly 

interest payments with weekly reset. Indexed to the 13-week T-bill auction result. 

Types of Marketable Treasury Securities
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Nominal Securities Frequency

 4-week bills Weekly

 8-week bills Weekly

 13-week bills Weekly

 17-week bills Weekly

 26-week bills Weekly

 52-week bills Every 4 weeks

 2-year notes Monthly 

 3-year notes Monthly 

 5-year notes Monthly

 7-year notes Monthly

 10-year notes Quarterly, with 2 re-openings 

 20-year bonds Quarterly, with 2 re-openings

 30-year bonds Quarterly, with 2 re-openings

Treasury Inflation-Protected Securities (TIPS)

 5-year TIPS Semi-annual, with 1 re-opening 

 10-year TIPS Semi-annual, with 2 re-openings

 30-year TIPS Annual, with 1 re-opening 

Floating Rate Notes (FRNs)

 2-year FRN Quarterly, with 2 re-openings

Treasury Issuance Calendar
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Treasury securities provide market participants with the opportunity to address 

numerous financial objectives

 Investment

 Portfolio hedging/immunization

 Monetary policy execution

 Collateral and defeasance

 Synthetic structures

 Liquidity

 Price discovery

 Regulatory needs

 Reserve and FX Management

Uses of Treasury Securities
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 The safety and liquidity of the Treasury market make it very attractive to 

global investors.

 Treasury maintains detailed statistics on the global distribution of Treasury 

holdings through the Treasury International Capital (TIC) System.

 The most up to date TIC data can be found at 

 http://www.treasury.gov/resource-center/data-chartcenter/tic/Pages/index.aspx

Who Holds Treasury Securities?
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 The primary dealers are a critical part of the primary market for Treasury securities 

and are required by the Federal Reserve Bank of New York (FRBNY) to participate in 

every Treasury auction.

 Updated analysis and statistics on the primary dealers can be found at: 

http://www.newyorkfed.org/markets/primarydealers.html

 The FRBNY does not bid competitively in Treasury auctions for its System Open 

Market Account (SOMA). SOMA can “roll” its maturing Treasury securities at the 

auction; any such awards to SOMA from rolling maturing securities are treated as an 

auction “add on.” SOMA may also acquire Treasury securities in the secondary 

market.

 Foreign ownership of Treasury securities is generally much greater than foreign 

auction participation because of significant secondary market purchases.

 The most recent Treasury auction allotment data can be found at:

 https://home.treasury.gov/data/investor-class-auction-allotments

Who Buys Treasury Securities at Auction? 
Quarterly Refunding and the Treasury Borrowing 

Advisory Committee

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 The Treasury Borrowing Advisory Committee (TBAC) includes 

representatives from firms that actively trade Treasury securities and firms 

that make large investments in Treasury securities. 

 At quarterly refunding meetings, the TBAC responds to questions and 

discussion charts presented by Treasury and representatives present their 

own analysis. 

 Changes in debt management policy are usually announced through 

quarterly refunding statements, issued at the end of the meeting. 

 Shortly after the meeting, all documents related to the quarterly 

refunding process are posted online at:

 http://www.treasury.gov/resource-center/data-chartcenter/quarterly-refunding/Pages/default.aspx