Examination of Treasury Terms Investment Interest Rates : A Reprint from ¿Economic Policy Review¿

In Nov. 2003, the Term Investment Option (TIO) program became an official cash management tool of the U.S. Treasury Dept. Through TIO, the Treasury lends funds to banks for a set number of days at an interest rate determined by a single-rate auction. The Treasury introduced TIO to try to earn a market rate of return on its excess cash balances. This article studies 166 TIO auctions from 11/03 to 2/06 to determine how TIO interest rates have compared with market rates. Investigates the spread between TIO rates & rates on mortgage-backed-security repos. Aside from offerings with very short term lengths, the Treasury receives an interest rate on TIO auctions comparable to market rates. Charts & tables.Hrung, Warren B. is the author of 'Examination of Treasury Terms Investment Interest Rates : A Reprint from ¿Economic Policy Review¿', published 2007 under ISBN 9781422315279 and ISBN 1422315274.