Markets & Treasury
- TBAC meeting (Feb. 3) and TBAC report to the Secretary (Feb. 4): primary dealers reduced their FY2026–28 privately‑held marketable borrowing estimate by $258 billion and, at current issuance sizes, expect a $1.1 trillion funding shortfall in FY2027–28. The Committee unanimously recommended Treasury keep nominal coupon, Floating Rate Note (FRN) and TIPS auction sizes at current levels for the upcoming quarters and endorsed further study of a SOFR‑indexed FRN.
- Quarterly Refunding statement (Deputy Asst. Sec. Brian Smith): Treasury announced a $125 billion refunding (3‑, 10‑, 30‑year issues) to refund ~$90.2 billion maturing Feb. 15, 2026 (new cash ~ $34.8 billion). Auction schedule: 3‑year (Feb. 10), 10‑year (Feb. 11), 30‑year (Feb. 12); settlement Feb. 17, 2026. Treasury plans to maintain current nominal coupon and FRN sizes for the next several quarters while monitoring structural demand trends.
- Bill supply, cash balance, and buybacks: Treasury expects to reduce short‑dated bill auction sizes starting in late March, likely producing a cumulative $250–300 billion net decline in bill supply by early May 2026. Treasury projects the TGA could peak near $1,025 billion (± $50B) by late April. Treasury signaled it will purchase up to $38 billion in off‑the‑run securities and up to $75 billion in 1‑month to 2‑year securities during Feb–Apr 2026 and released a tentative buyback schedule; a notice of proposed rulemaking on direct buyback access to additional counterparties remains open (comment period closes Feb. 13, 2026).
- Incentives & market implications (summary): Federal Reserve purchases of bills (SOMA/RMP) and anticipated Fed policy moves are materially affecting short‑end demand; dealer and MMF demand are cited as reasons to study SOFR FRNs (may attract MMF and bank demand). Planned bill reductions and buybacks tighten short‑dated supply and can raise demand pressures in other front‑end instruments; buyback design changes (e.g., allowing yield‑spread offers or exchanges) would alter participation incentives across dealer and real‑money investor groups.
Critical minerals & supply‑chain policy
- Critical Minerals Ministerial (opening remarks, Feb. 4): administration officials outlined major actions and proposals to secure critical minerals supply chains: up to $100 billion in lending authority to the Office of Strategic Capital; two announced primary smelter projects in the past month (one reported fully funded); Project Vault — a $12 billion national strategic critical minerals reserve under the Export‑Import Bank; and Congressional provision of $2 billion to expand the national defense stockpile for minerals.
- Trade and market proposal: the Administration proposed a “preferential trade zone” for critical minerals with enforceable reference prices/price floors at each stage of production and adjustable tariffs to uphold those floors; the ministerial included participation by many partners (official count reported at 55 participants including the EU) and planned framework agreements with several partners.
- Incentives & trade note: the stated objective is to stabilize long‑run prices and returns to attract sustained private investment across upstream and downstream stages; such floors and trade‑zone protections would change price and investment incentives (supporting project financing and domestic processing) but could also alter global price signals and trade flows.
Border security, enforcement, and related operations
- DHS preliminary January 2026 data (Feb. 4 DHS release): CBP reported 34,631 total nationwide encounters in January 2026 (reported as 87% lower than the previous administration’s monthly average for Feb 2021–Dec 2024); U.S. Border Patrol Southwest border apprehensions reported at 6,073 in January 2026 (reported as 93% below the FY1992–FY2024 monthly average). DHS highlighted this as the ninth consecutive month with zero Border Patrol releases into the interior and the fourth consecutive month of declining southwest apprehensions.
- Drug seizures (January preliminary): DHS reported record monthly seizures for January — fentanyl 816 lbs, methamphetamine 12,241 lbs, cocaine 5,386 lbs, marijuana 17,639 lbs (final numbers to be released in coming weeks).
- Enforcement operations and related releases: DHS / White House reported Operation Metro Surge milestones — more than 4,000 noncitizen arrests in Minnesota since the operation began, with arrests said to include individuals with serious criminal convictions; announcements also referenced expanded county cooperation for ICE custody and a plan to deploy body‑worn cameras for relevant operations. DHS also publicized contracts announced for construction of 230 miles of a “Smart Wall” (reported $4.5 billion) in connection with border infrastructure efforts.
- Legal, political, and incentive context (summary): DHS materials included legal interpretations of administrative warrants and cited polling data on public support for deportation policies; these releases are policy communications with clear enforcement and political incentives to showcase operational metrics and resource commitments. DHS labeled the figures preliminary and stated further detail will follow in final data releases.
Other federal actions & diplomacy (selected items)
- State Department: opening remarks at the Critical Minerals Ministerial (Secretary Rubio, Vice President remarks) and related bilateral engagements were announced, including planned critical minerals framework signings with partners. Under Secretary DiNanno was scheduled to travel to Geneva and Tel Aviv (Feb. 5–10) for the UN Conference on Disarmament and a Joint Political‑Military Group Dialogue (Feb. 8 in Tel Aviv).
- Military commissions: Department of the War posted a media invitation for the pre‑trial hearing in United States v. Encep Nurjaman (charges related to 2002–2003 bombings in Indonesia).
- Coast Guard: DHS noted Operation Taconite as a major domestic icebreaking operation in response to severe winter conditions in the Eastern U.S. and Great Lakes.
- Domestic policy note: White House released a Presidential message for National Women and Girls in Sports Day reiterating the Administration’s policy condition that programs deemed to “reject biological reality” will not receive federal funds.
What to watch next
- Treasury refunding auctions: 3‑yr (Feb. 10), 10‑yr (Feb. 11), 30‑yr (Feb. 12) — auction results and any change in indirect/foreign participation will be market focal points.
- Treasury buyback NPR comment deadline (Feb. 13) and any subsequent final rule on expanded buyback counterparties or FedTrade Plus transition details.
- TBAC / Treasury signals on coupon issuance sizing and any movement toward larger coupon sizes in late 2026 or FY2027.
- Outcomes and texts from the Critical Minerals Ministerial (FORGE / Agreement on Trade and Critical Minerals negotiations) and any detailed design of the proposed preferential trade zone / price‑floor mechanism.
- DHS final January statistics and follow‑on reporting on drug seizures and enforcement metrics.
Selected primary sources
(agency releases and ministerial remarks cited above are the principal sources for items summarized.)