Minutes of the Meeting of the Treasury Borrowing Advisory Committee November 3, 2026

The Committee convened in a closed session at the Department of the Treasury at 10:45 a.m.  All members were present.  Denise Rosenhaft Gray from BNY was also present to assist the Committee Chair.  Assistant Secretary for Financial Markets Hunter McMaster, Deputy Assistant Secretary for Federal Finance Brian Smith, Director of the Office of Debt Management Fred Pietrangeli, and Deputy Director of the Office of Debt Management Tom Katzenbach welcomed the Committee.  Other members of Treasury staff present were Abigail Brown, Chris Cameron, Dave Chung, Gabriella Csepe, Robert Dunsky, Chandler Elwyn, Gary Grippo, Salar Moghadam, Gavin Ross, Renee Tang, and Spencer Woodruff.  Federal Reserve Bank of New York staff members Ellen Correia Golay, Peggy Kauh, and Kyle Watson were also present.

Director Pietrangeli highlighted changes in receipts and outlays through Q4 FY2026.  Within receipts, Pietrangeli cited a $159 billion (5%) increase in withheld and a $103 billion (9%) increase in non-withheld taxes.  These increases were offset by a $22 billion decrease in customs deposits, adjusting for tariff refunds, as well as a $43 billion (-9%) decrease in gross corporate taxes and a $27 billion increase (79%) in corporate refunds, the latter two attributed to provisions from the One Big Beautiful Bill.  In terms of outlays, Pietrangeli noted that the largest increases occurred at the Department of the Treasury, which rose by $122 billion (8%) due to higher gross interest resulting from higher levels of debt, and at the Department of Health and Human Services, which rose by $120 billion (6%) because of higher Medicare and Medicaid spending.

Pietrangeli then turned to deficit and privately-held net marketable borrowing projections, noting that the median primary dealer’s aggregate FY2027-28 privately-held net marketable borrowing estimate was nearly unchanged since last quarter’s Committee meeting.  He noted that current issuance sizes would result in a modest funding shortfall in FY2027 relative to projected borrowing needs, but that the gap could likely be managed using bills.  However, looking ahead to FY2028-2029, the median primary dealer forecast for privately-held net marketable borrowing implies a $2.14 trillion funding shortfall based on current coupon auction sizes and privately-held bill supply.

Debt Manager Dunsky next reviewed primary dealers’ feedback on whether Treasury should avoid scheduling Treasury bill and floating rate note (FRN) auctions on days when the Federal Open Market Committee is expected to release a statement (i.e., “FOMC days”), which would be consistent with its existing scheduling practices for nominal coupons and TIPS.  Almost all primary dealers favored no change to the auction schedule.  Primary dealers pointed to operational complexities associated with conducting more auctions on the surrounding days as generating a greater cost than any benefit associated with avoiding bill and FRN auctions on FOMC days. Overall, dealers do not currently see bill and FRN auctions on FOMC days as a problem.

Debt Manager Elwyn then summarized primary dealers’ views on the effects of the larger liquidity-support buyback operations announced on August 19 for the 10- to 20-year and 20- to 30-year sectors, as well as potential enhancements to the buyback program. Most dealers reported at least modest improvements in liquidity and market functioning, citing a more dependable outlet for off-the-run securities, less risk of price dislocations, and more stable relative-value relationships, although the effect on dealers’ ability to intermediate client flows was mixed. Recommendations from primary dealers included clearer and earlier communication, broader distribution of purchases through per-CUSIP limits, and smaller, more frequent operations. Some dealers noted that concentrated purchases increased the risk of “missing” the buyback and having to manage the associated duration exposure. Dealers also discussed spread-based pricing and switch transactions, both of which have been discussed previously and would require further exploration and significant time and effort to implement.

Deputy Director Katzenbach next recapped primary dealers’ thoughts on trends in structural demand for Treasuries.  Money market mutual funds, stablecoins, and the Federal Reserve System Open Market Account (SOMA) were identified as potential sources of growing demand for bills, while respondents pointed to increased bank demand in the belly of the curve.  Conversely, primary dealers had mixed views about market demand for longer-dated securities from liability-driven investors.

Katzenbach then reviewed primary dealers’ expectations for coupon issuance.  Respondents generally expected Treasury to begin increasing nominal coupon and FRN auction sizes by the end of FY2027, and overwhelmingly expected Treasury to focus the eventual increases in short- and intermediate-dated tenors.  Katzenbach noted that several primary dealers reiterated their view that Treasury should consider issuing a 1-year SOFR-indexed FRN.  The Committee agreed that exploring potential issuance of SOFR-indexed FRNs would be worthwhile and suggested that multiple tenors be considered in light of potential interest from different investor types.       

The Committee adjourned at 11:50 a.m. for lunch.

The Committee reconvened at 1:00 p.m.

The Committee then discussed the first charge, which addressed the recent trends in corporate borrowing related to super intelligence (SI) and associated businesses.  The presenter stressed that borrowing in the SI sector is constantly evolving as new issues are announced nearly every week.  Additionally, the sector is expected to continue to ramp up borrowing in 2027 as the demand for computing capacity outstrips supply into 2028.  The presenter asserted that competition for capital currently appears to be contained within the tech credit ecosystem, and that there is no clear evidence that SI-related issuance is crowding out Treasuries or non-tech credit.  Lastly, the presenter attributed the rise seen in the 10-year Treasury yield primarily to capex-driven economic growth that has pushed real yields higher, with additional upward pressure from energy price shocks.

The Committee next discussed the second charge, which evaluated the growth in the use of Treasury derivatives, in particular swaps and futures. The presenter noted that certain types of investors prefer to obtain leveraged duration exposure through derivatives for liquidity and operational reasons. Compared to buying cash Treasuries and obtaining leverage through repo markets, derivatives typically provide more favorable accounting treatment, have implicit financing costs that are not reported as explicit expenses, and reduce rollover risk for financing. Tax considerations were highlighted as another relevant factor for some investors. To increase the attractiveness of using cash Treasuries, the presenter suggested that policymakers could consider options to lessen balance sheet constraints of holding cash Treasuries, evaluate potential changes to expense, accounting and tax treatment, incentivize institutions to build repo infrastructure, reduce operational frictions associated with Treasury settlement, and minimize legal and regulatory challenges associated with onboarding as a repo transaction counterparty. 

The Committee adjourned at 2:45 p.m.

The Committee reconvened at 3:00 p.m.

The Chair summarized key elements of the Committee report for Secretary Bessent and followed with a discussion of recent market developments.

Finally, the Committee turned to its financing recommendation for the current quarter and unanimously recommended that Treasury maintain nominal coupon, FRN, and TIPS auction sizes at current levels but also consider adjusting its forward guidance language.  The Committee agreed that in light of projected borrowing needs, increases in coupon auction sizes would likely be appropriate in the second half of FY2027. Members generally agreed that additional issuance should be concentrated in the 2- to 10-year sector, and had a meaningful discussion about potential future changes to 20-year and 30-year issuance.

The Committee adjourned at 4:05 p.m.

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Brian Smith

Deputy Assistant Secretary for Federal Finance

United States Department of the Treasury

Certified by:

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Jason Granet, Chair

Treasury Borrowing Advisory Committee

November 3, 2026

Taking into consideration Treasury’s short, intermediate, and long-term financing requirements, as well as the variability in financing needs from quarter to quarter, what changes, if any, do you recommend to Treasury issuance?  Please also provide perspectives regarding market expectations for Treasury issuance, the effects of changes in SOMA holdings, the evolution of Treasury holdings by different types of investors, as well as auction calendar construction.

Please summarize recent trends in corporate bond issuance related to super intelligence and associated businesses. How much of such issuance has occurred to date and is projected for the future. What types of investors are the primary buyers of such debt? To what extent does such debt issuance compete with Treasury securities for investor demand? What other potential effects on fixed income markets should Treasury be monitoring?

Please comment on the growth in the use of Treasury derivatives, in particular swaps and futures. How has use of these derivatives evolved? Who are the primary users and what factors have driven their usage? How do these derivatives affect demand for cash Treasury securities? What effects do these derivatives have on Treasury repo markets? Does the use of derivatives by investors reduce the size of the Treasury repo market? Should Treasury consider any policy initiatives to increase demand for cash Treasury securities relative to Treasury derivatives?

We would like the Committee’s advice on the following: