Institutions: U.S. Treasury Approaching the "Efficient Frontier" of Financing"

Strategists at SMBC Americas stated that as long as demand for Treasury bills remains strong—and is "still growing"—the U.S. Treasury can successfully adjust its issuance maturity structure to lower the yield curve, although the department may already be approaching the "efficient frontier."

The strategy team led by Joseph Abate pointed out that Federal Reserve rate hikes, a reduction in the scale of Reverse Repo Operations, and growth in money market fund balances have enabled the Treasury to increase the supply of Treasury bills to 22% of total debt issuance without "significant discounting," as evidenced by the stable spread between Treasury bills and Overnight Index Swaps (OIS).