Statement Regarding Plans to Reinvest Principal Payments from Agency Debt and Agency Mortgage-Backed Securities into Treasury Securities

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Operating Policy

Statement Regarding Plans to Reinvest Principal Payments from Agency Debt and Agency Mortgage-Backed Securities into Treasury Securities

May 30, 2019

On March 20, 2019, the Federal Open Market Committee (FOMC) provided additional information regarding plans for its securities holdings via its Balance Sheet Normalization Principles and Plans. Beginning in October 2019, principal payments received from agency debt and agency MBS holdings will be reinvested into Treasury securities through secondary market purchases, subject to a maximum amount of $20 billion per month; any principal payments in excess of $20 billion will continue to be reinvested in agency MBS. Treasury securities purchases will initially be conducted across a range of maturities to roughly match the maturity composition of Treasury securities outstanding. The FOMC will revisit this reinvestment plan in connection with its deliberations regarding the longer-run composition of the SOMA portfolio.

Under this guidance, the Federal Reserve Bank of New York's Open Market Trading Desk (the Desk) plans to distribute secondary market Treasury reinvestment purchases across eleven different sectors, including nominal coupons, bills, Treasury Inflation-Protected Securities, and Floating Rate Notes. The approximate amount of purchases in each sector will be determined by sector weights. These sector weights will be based on the 12-month average of the par amount of Treasury securities outstanding in each sector relative to the total amount outstanding across all sectors, measured at the end of September.

The monthly amount of Treasury reinvestment purchases will be announced on or around the ninth business day of each month and purchases will generally be conducted over the one-month period until the next announcement. The Desk will also release a tentative schedule of purchase operations expected to take place over the monthly period. The Desk plans to release the first schedule of purchase operations on October 11, 2019.

Additional information on Treasury reinvestment purchases can be found in the following locations:

FAQs: Treasury Reinvestments - Purchases »
Statement Regarding Reinvestment in Treasury Securities and Agency MBS »

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