By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) -The U.S. Treasury Department said on Friday it had asked dealers when they expected the Federal Reserve would end its long-running scheme to reduce the size of its bond holdings, widely known as quantitative tightening, or QT.
It also sought dealers’ economic, fiscal and monetary policy forecasts, including their estimates for Treasury financing for fiscal years 2026 to 2028.
The Treasury also wanted follow-up input on the U.S. 20-year bond auction schedule, which the department initially brought up in a May 2025 survey.
The survey is part of the Treasury’s typical process ahead of its quarterly refunding announcement, which is due next month.
On QT, the Treasury specifically asked dealers their forecast for when the Fed will cease redemptions of Treasury securities from the SOMA (System Open Market Account) portfolio held by the Fed that includes Treasury securities and agency mortgage-backed securities (MBS).
The Treasury also wants to find out whether dealers think the Fed will begin purchasing Treasury securities with proceeds from principal payments received on its MBS holdings.
Fed Chair Jerome Powell said on Tuesday that the end could be approaching for the QT.
“Some signs have begun to emerge that liquidity conditions are gradually tightening, including a general firming of repo rates along with more noticeable but temporary pressures on selected dates,” Powell said at a gathering held by the National Association for Business Economics in Philadelphia.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Kirsten Donovan)
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