The Treasury Borrowing Advisory Committee (TBAC) held its quarterly meeting on February 3, 2026, at the U.S. Department of the Treasury. The session included representatives from the Treasury, Citigroup, and the Federal Reserve Bank of New York. All committee members were present except Jill Funk and Anastasia Titarchuk.
Deputy Assistant Secretary for Federal Finance Brian Smith opened the meeting by acknowledging outgoing member Gagan Singh for his service and summarizing recent developments in debt management. Treasury counsel also provided an annual review of committee guidelines.
Nick Steele, Director of the Office of Fiscal Projections, reported significant changes in government receipts and outlays during the first quarter of fiscal year 2026. Customs deposits increased by 315%, or $71 billion, due to higher tariff revenue. Withheld taxes rose by $47 billion and non-withheld taxes by $45 billion. However, corporate tax collections dropped by 23%, or $27 billion, attributed to provisions in recent legislation that allow accelerated expensing and depreciation. On the spending side, interest payments on public debt drove a 13% increase in Treasury outlays ($48 billion). Outlays from the Department of Education fell by 26% ($11 billion), while other outlays declined mainly because of reduced disbursements from agencies such as the Environmental Protection Agency and FEMA.
Fred Pietrangeli, Director of the Office of Debt Management, noted that primary dealers have lowered their estimates for privately-held marketable borrowing for fiscal years 2026-28 by $258 billion. Current issuance sizes mean that Treasury is slightly overfunded for FY2026; however, projections indicate a funding shortfall of about $1.1 trillion in FY2027-28 if current auction sizes continue.
Tom Katzenbach, Deputy Director of Debt Management, said most primary dealers believe current coupon auction sizes are sufficient to meet financing needs through FY2026. Adjustments to bill supply are expected to address any changes in requirements. Dealers anticipate possible increases in nominal coupon auction sizes toward late calendar year 2026 or early 2027.
Liang Jensen presented feedback from primary dealers regarding SOFR-indexed floating rate notes (FRNs). Dealers generally support issuing these securities due to strong demand from money market mutual funds and other investors. Supporters argue that SOFR FRNs could diversify front-end issuance and reduce funding costs but cautioned about potential risks such as cannibalizing demand for existing products or exposure to spikes in SOFR rates during market stress periods.
Gavin Ross reviewed dealer perspectives on alternative buyback mechanisms for off-the-run Treasury securities. Dealers suggested that allowing yield spread offers could broaden participation and improve pricing competitiveness in buyback operations. Exchange transactions were seen as beneficial but would require further study before implementation due to operational complexities.
Joshua Stachura summarized views on changing issuance patterns for 7-year notes—specifically moving from monthly new issues to quarterly issues with two reopenings—which most dealers supported as a way to improve secondary market liquidity.
The committee discussed how Federal Reserve purchases of Treasury bills might affect issuance plans and whether focus should be placed on privately-held versus total outstanding debt when making decisions about composition.
During discussion on investor trends, presenters highlighted several factors influencing demand: runoff from Federal Reserve holdings (SOMA), growth in money market fund assets, expanding bank portfolios, evolving pension structures, increased foreign private investment in Treasuries, and emerging demand linked to stablecoins. Collateral needs and central bank reserve management were cited as key considerations shaping portfolio allocations going forward.
After reviewing all topics—including recommendations on refunding approximately $90.2 billion in maturing notes and bonds—the committee unanimously advised maintaining current auction sizes for nominal coupons, FRNs, and TIPS over upcoming quarters.
The meeting concluded after a summary report was delivered to Secretary Scott Bessent.
