TBAC found Treasury yields little changed since its last meeting and noted global volatility after a sharp rise in Japan government bond yields.
The Committee supported Treasury exploring issuance of a SOFR Floating Rate Note (FRN); most primary dealers surveyed also supported exploring issuance.
TBAC recommended keeping nominal coupon, FRN, and TIPS auction sizes unchanged now, while stating FY2027 projections could warrant increases in coupon issuance.
The Committee highlighted Federal Reserve steps: balance sheet reduction ended Dec 1, and the Fed began $40 billion/month Treasury bill purchases via Reserve Management Purchases (RMPs).
Economic data were distorted by the October–November 2025 government shutdown (notably a missing October CPI), likely producing an artificially low October reading and a stronger reading later.
TBAC noted a shift in Treasury holdings from the Fed’s SOMA portfolio to more price-sensitive private investors (MMFs, ETFs, banks, broker-dealers) and discussed changing demand dynamics and diversification value of Treasuries.
Follow Up Questions
What is the Treasury Borrowing Advisory Committee (TBAC) and who serves on it?Expand
TBAC is a statutorily‑governed advisory committee that meets quarterly with the U.S. Treasury to advise on debt management and market conditions. Its membership is senior executives from a cross‑section of buy‑ and sell‑side firms (large banks, broker‑dealers/primary dealers, asset managers, hedge funds, insurance companies and other investors); the Treasury publishes a members list.