There was a confluence of positive factors contributing to the development including a decline in inflation and stable inflationary expectations, resulting in decline in both nominal and real interest rates and availability of ample systemic liquidity, contributed no less by the rising tide of capital flows.
Since bank reserves are equivalent to short-term debt, the US Treasury could have opted for simply reducing its debt’s average term to maturity, limiting long-term securities, and enabling a flattening of the yield curve. In any case, the impact of the recent monetary easing on the yield curve and, even less so, its influence on the economy, is not clear.