Talk at the Chicago Fed

I was pleased to speak on a panel last week at the Sixth Annual Risk Conference sponsored by the Federal Reserve Bank of Chicago and the Driehaus College of Business, DePaul University.

I appeared on a panel on Business Model Risk, and the title of my presentation was “The Treasury and the Fed: A Symbiotic Relationship, and What it Means for Interest Rates.”

The theme of the conference was “Navigating the New Playing Field”:

In order to navigate today’s increasingly complex global markets, financial institutions and supervisors alike must consider challenges posed by current economic conditions, an evolving regulatory environment, new market participants and increasingly demanding technology capabilities and controls.

I enjoyed the conference.  It was informative, the participants were engaging, and the hosts were gracious.

My slides, and those of some of the other presentations, can be found here (click on “Agenda” after you get to the conference home page).  I discussed how the playing field of interest rates is affected by the actions of the Treasury and the Fed.  One slide showed a “spectrum” of the Treasury’s marketable securities:

Win Analytics Chicago Fed 9Apr2013 revised 10apr13 Extract for Blog

All 337 securities are represented by a succession of thin bands in order of maturity.  The thickness of each band corresponds to its outstanding principal amount, and the bands are color-coded by type of security (blue for T-Bills, green for T-Notes, etc.).  You can see how front-loaded the debt is.  Half of the debt matures within three years, an observation also made in The National Debt is Closer than it May Appear.

Other slides showed the Fed’s share of each of these securities, weighted by par amount or by duration.  The format for these charts was inspired by a visualization created by the research firm Stone & McCarthy.

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