The Treasury Borrowing Advisory Committee (TBAC) held its quarterly meeting on November 4, 2025, at the Department of the Treasury. The session included nearly all committee members, with Gagan Singh absent. Citigroup’s Allison Weed attended to assist the Committee Chair. Several officials from the Treasury and staff from the Federal Reserve Bank of New York were also present.
Deputy Assistant Secretary for Federal Finance Brian Smith opened by thanking outgoing Vice Chair Mohit Mittal for his service and discussed recent developments in debt management. He referenced the current lapse in appropriations and noted that Treasury’s Uniform Offering Circular includes guidance on contingencies related to Treasury Inflation Protected Securities (TIPS) if Consumer Price Index data is unavailable.
Director of Fiscal Projections Nick Steele reported that federal receipts reached $5.235 trillion in fiscal year 2025, marking a 6% increase over the previous year. This rise was attributed mainly to growth in withheld taxes—reflecting wage and employment gains—and a significant jump in customs deposits due to higher tariff receipts. Outlays grew by 4% to $7.01 trillion, largely driven by increased interest costs and inflation adjustments for transfer payments. Adjustments for tax deferrals would have shown a 9% annual increase in receipts; similar adjustments showed outlays up by 3%.
Fred Pietrangeli, Director of Debt Management, presented projections indicating that current auction sizes should meet financing needs through fiscal year 2026, but larger gaps are expected in fiscal years 2027 and 2028. He noted that Federal Reserve reinvestments into Treasury bills will help reduce these projected financing gaps.
Debt Manager Nicholas Chisholm summarized primary dealers’ views regarding changes to the Federal Reserve’s System Open Market Account (SOMA) portfolio size and composition. Dealers had anticipated the FOMC’s October decision to end redemptions of Treasury securities from SOMA and supported continued reinvestment of agency security principal payments into Treasury bills.
Committee members discussed tighter funding market conditions amid higher rates but observed that repo markets for Treasury securities remained orderly. They cited regulatory constraints, increased bill issuance, and a higher Treasury General Account (TGA) balance as contributing factors since the debt limit was raised earlier this year. The TGA reached $1 trillion on October 30, which reduced reserve balances further—a move consistent with longstanding cash balance policy given large maturing securities at month-end.
After reconvening following lunch, Debt Manager Gavin Ross relayed consensus among primary dealers that current coupon auction sizes are adequate through FY2026; increases may be needed in certain maturities—especially two- and five-year notes—in subsequent years.
Debt Manager Joshua Stachura reviewed dealer perspectives on potential adjustments to the auction schedule for the 20-year bond and highlighted SOMA holdings’ role in securities lending markets. Dealers favored shortening when-issued periods between auction and settlement for reopenings and supported maintaining existing new-issue cycles.
The Committee then considered optimal debt issuance strategies using its Optimal Debt Model. It found that higher debt levels and term premia have increased volatility in debt service costs recently but concluded that current issuance practices remain near optimal efficiency according to model outputs under various economic scenarios.
In its recommendations for upcoming quarters, TBAC advised keeping nominal coupon and floating rate note auction sizes unchanged while increasing December’s five-year TIPS reopening by $1 billion—mirroring an earlier increase—and leaving January’s ten-year new issue size steady.
The meeting concluded after summarizing key report elements for Secretary Scott Bessent before final adjournment at 4:40 p.m.
