Average dealer book expansion of 21 cents (approximately 280 won) per $1 (approximately 1,335 won) of coupon issuance

Federal Reserve researchers found that large primary dealers' balance sheets expand by an average of 21 cents per $1 of US Treasury coupon issuance, according to a FEDS Notes published October 30 analyzing data from eight bank-affiliated dealers from January 2016 through June 2025. Roughly two-thirds of the balance sheet growth is tied to customer Treasury financing demand, with the remainder attributable to dealers' own Treasury inventory, a relationship that persisted even after direct auction take-down effects faded. The findings matter because they quantify how Treasury supply growth is absorbing dealer intermediation capacity, a key input in ongoing debates about Treasury issuance strategy and dealer leverage constraints. Dealers typically absorb bonds at auction before distributing them to clients, and the study notes dealer take-down shares at auctions such as the 3-year note as a relevant metric. Watch for how these estimates feed into Fed and Treasury discussions of bill-vs-coupon issuance mix and potential balance sheet relief measures.