What's the ideal composition of the Fed's Treasury securities? A handful of Fed officials (incl govs Waller and Bowman) have argued for weighting the Fed's holdings towards T-bills. Dallas Fed President Lorie Logan, who used to run the SOMA for the NY Fed, lays out the arguments for maintaining a more neutral composition in a speech today • Effectiveness: A neutral portfolio keeps monetary policy "in the background" and doesn't distract from the Fed's primary tool (the overnight rate target) • Current operating regime considerations: The ample-reserves regime reduces the need for precise control of reserve supply that previously justified a tilt toward short-dated assets • Consolidated government perspective: A neutral portfolio doesn't require the Treasury to adjust its issuance to offset Fed holdings. Since the Treasury maintains "regular and predictable" issuance patterns, a neutral Fed portfolio complements this approach **Note: Even with a portfolio that isn't as short as it could be, the Fed still has more duration than the outstanding stock. The upshot is that although a neutral mix of holdings is appropriate in then long run, "it would make sense in the medium term to overweight purchases of shorter-dated securities so as to more promptly return the Fed’s holdings to a neutral allocation." https://www.dallasfed.org/news/speeches/logan/2025/lkl250225