The Treasury Borrowing Advisory Committee convened on February 4, 2025, at the Department of the Treasury to discuss various financial matters. The meeting was attended by key members from the Treasury and representatives from the Federal Reserve Bank of New York. Andrew Hollenhorst from Citigroup was present to assist the Committee Chair.
Acting Assistant Secretary for Financial Markets Brian Smith opened the session, welcoming new member Jill Funk. The annual review of Committee guidelines was presented by Treasury counsel.
Director Fred Pietrangeli highlighted changes in receipts and outlays for Q1 FY2025. Receipts amounted to $1.083 trillion, a decline attributed to deferred tax payments from previous fiscal years. Outlays increased to $1.794 trillion due to higher interest costs, inflation adjustments, and defense spending.
Pietrangeli also discussed projections for privately-held net marketable borrowing, noting that while funding is secure through FY2025, larger gaps are anticipated in subsequent years. Dealers expressed uncertainty regarding future borrowing needs due to economic conditions and policy changes.
Deputy Director Tom Katzenbach reviewed expectations for coupon issuance with minimal changes expected until late 2025 or 2026. Anticipated increases in TIPS issuance were noted for upcoming months.
Debt Manager Joshua Stachura summarized views on potential adjustments to the Federal Reserve’s SOMA portfolio. Most dealers expected quantitative tightening to conclude by early 2026 with reinvestment focused on short-term securities.
Senior Advisor Nahiomy Alvarez provided insights into foreign demand for U.S. Treasuries over the past year, noting moderate official demand but strong private interest driven by trading opportunities and yield differentials.
The Committee examined Treasury's buyback program, finding it consistent with liquidity support objectives but suggested studying possible adjustments to purchase amounts.
Central clearing developments were discussed following SEC rule adoption in December 2023. Industry preparedness and potential impacts of multiple CCPs were evaluated as both CME and ICE plan new clearing solutions.
For upcoming quarters, the Committee advised maintaining current auction sizes for nominal coupons and FRNs while recommending an increase in TIPS tenors this quarter.
Finally, key elements of the report were summarized by the Chair for Secretary Bessent before concluding discussions on recent market developments.
