TY - JOUR T1 - Tracking the U.S. Treasury JF - The Journal of Fixed Income SP - 37 LP - 50 DO - 10.3905/jfi.2005.591607 VL - 15 IS - 2 AU - John J.. Merrick, Jr Y1 - 2005/09/30 UR - https://pm-research.com/content/15/2/37.abstract N2 - At the turn of the millennium, with its coffers flush from unexpectedly high tax receipts, the U.S. Treasury embarked upon a debt buy-back program, something not seen since 1930. The first question is how well the Treasury did versus its self-espoused goals of minimizing taxpayer financing costs while promoting efficient capital markets. Regarding security selection decisions, give the Treasury solid marks. It made no egregious errors (it avoided buying back the priciest issues) but could have done some additional fine-tuning (it repurchased moderately rich issues as well as cheap ones). The second question is how well the Treasury conducted its business. Here, the good news is that its well-designed reverse auction procedures did not upset the markets for the bonds it actually touched. The bad news is that the buy-backs produced unintended and unwanted reverberations in related markets (those for the single-payment Treasury STRIPS securities). The results presented here confirm that recently proposed reforms of STRIPS market practices may be very good ideas. ER -