Treasury Supply Shocks: Propagation Through Debt Expansion and Maturity Adjustment

Huixin Bi, Maxime Phillot and Sarah Zubairy

No 35098, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Historically high debt-to-GDP levels in the U.S. have raised concerns about future financial market stability and fiscal sustainability. We use high-frequency data and consider Treasury futures price changes within narrow windows around auction announcements in order to identify two distinct Treasury supply shocks: debt volume shocks that capture changes in the level of public debt, and maturity adjustment shocks that reflect changes in the maturity structure. We find that debt expansion shocks raise yields across the curve by increasing term premia, leading to tighter financial conditions. These shocks crowd out private sector activity by reducing investment and production, particularly during periods of rapid debt growth. In contrast, maturity extension shocks steepen the yield curve while lowering credit risk premia and fiscal uncertainty. By reducing risk premia, these shocks stimulate near-term investment and production, even as higher long-term borrowing costs weigh on longer-horizon investment. We also show that the Treasury debt management policy can meaningfully interact with the Federal Reserve's asset purchase programs.

JEL-codes: E44 E63 H63 (search for similar items in EconPapers)
Date: 2026-04
New Economics Papers: this item is included in nep-ifn
Note: ME PE
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w35098.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
Working Paper: Treasury Supply Shocks: Propagation Through Debt Expansion and Maturity Adjustment (2026)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:35098

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w35098
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().