U.S. Treasury runs monetary policy as much – if not more – than the Fed, study suggests

By modifying the maturity profile of its debt issuance, the U.S. Treasury Department is adeptly steering financial conditions and, by extension, the broader economy, thereby encroaching upon the fundamental roles traditionally held by the Federal Reserve, according to a recent study published by Hudson Bay Capital.

This novel tool showcasing the tug of war between fiscal and monetary policy, which authors Stephen Miran and Nouriel Roubini dubbed “activist Treasury issuance” (“ATI”), “has been a major market driver over the past year, and we expect it will continue to play a significant role in the year ahead; ATI may become a regular element of the policy toolbox, driving political business cycles in the market and the economy.”