NY Fed Treasury Purchases 22.5 to 30 yrs

NY Fed Treasury Purchases 22.5 to 30 yrs tracks outright (permanent) buys of 22.5 to 30 year nominal bonds, not inflation-linked debt, for SOMA. SOMA, the Fed securities portfolio, holds what the Open Market Trading Desk (the Desk) buys under FOMC, the Fed policy committee, orders. The Desk buys in the secondary market, secondhand trading, only from primary dealers, firms trading directly with the Fed. Each print is the Desk's own accepted buying, not Treasury issuance, total Fed holdings or investor appetite for long bonds.

The tentative schedule appears on or around the 9th business day and covers mid-month to mid-next month in Eastern Time with dates, times and caps. Each operation lists a maximum size cap, uses a fixed intraday bidding window and settles 1 business day later via Fedwire, the Fed settlement system. Results appear on the New York Fed site after each auction, with average and extreme prices plus partial-allocation share at mid-month for the prior period. Full counterparty (trading partner) detail follows quarterly after about 2 years, and timing can change while some periods have no operation.

The reading rises or falls with policy size and auction mechanics, not with Treasury supply or investor demand. In the large-scale purchase era the sector saw about 4 operations a month, and in the small-value era usually 1 small test. January 2022 shares rest on a 12-month average of bonds outstanding:

• Nominal coupons 0 to 2.25 years, 31%: shortest coupons except paper with 4 weeks or less left.
• Nominal coupons 2.25 to 4.5 years, 20%: short to middle coupons.
• Nominal coupons 4.5 to 7 years, 16%: middle coupons with the leading 7-year note.
• Nominal coupons 7 to 22.5 years, 16%: joins the 7 to 10 and 10 to 22.5 slices, covering the 10-year area and longer bonds.
• Nominal coupons 22.5 to 30 years, 9%: longest nominal bonds near the 30-year area; this series.
• Inflation-protected paper 1 to 30 years, 8%: joins the 1 to 7.5 and 7.5 to 30 slices for inflation-linked bonds.

On November 18, 2021 the schedule set a $1.6 billion cap for 22.5 to 30 year bonds. Bidding ran 10:10 to 10:30 am, and dealers offered $3,762 million across 30 CUSIPs, distinct bond identifiers. The Desk accepted $1,576 million, each award at its own bid price, leaving $24 million unfilled for coverage of about 2.39 times. Four operations totaled about $6,298 million, so caps bind totals while lower acceptance than bids is normal, near 9% of all-sector buying.

1. Monthly envelope: The FOMC sets monthly Treasury pace and the Desk splits it across 8 sectors by 12-month average share outstanding. For example, $70 billion times 10% plans $7.0 billion for 22.5 to 30 yrs.
2. Scheduling: The schedule sets date, time window, bond type and maturity range plus a maximum cap, such as $1.6 billion. 4 caps of $1.6 billion schedule $6.4 billion.
3. Bids: Primary dealers submit price and par bids in FedTrade, the Fed auction platform, in $1 million steps with up to 9 bids per bond.
4. Ranking: Bids rank by closeness to market prices at closing plus relative-value scores from the New York Fed model. Ineligible bonds include newest issues, futures-delivery bonds and scarce repo-market bonds, with a 70% holding limit.
5. Acceptance: It is a multiple-price auction, so each accepted bid wins at its own price and totals may fall below the cap. One example accepts $1,575 million of $3,800 million bid, leaving $25 million unfilled.
6. Totaling: The published reading sums accepted face value across bonds with no weighting or seasonal adjustment, and monthly totals sum operations. Coverage equals submitted divided by accepted, here $3,800 over $1,575 for about 2.41 times.