The Committee convened in a closed session at the Department of the Treasury at 9:00 a.m. All members were present. Barrie Ringelheim from Citigroup was also present to assist the Committee Chair. Director of Policy & Planning 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, Nicholas Chisholm, Dave Chung, Gabriella Csepe, Gary Grippo, Liang Jensen, Shahnewaz Khan, Chris Kubeluis, Kyle Lee, Libby Ragan, Gavin Ross, Joshua Stachura, Nick Steele, and Renee Tang. Federal Reserve Bank of New York staff members Luis Gonzalez, Justin Meyer, and Kyle Watson were also present.
Director Pietrangeli highlighted changes in receipts and outlays through Q3 FY2025. Receipts totaled $4.01 trillion, an increase of $254 billion (7%) compared to the same period last year, primarily due to 6% growth in withheld taxes which reflects wage and employment growth. Outlays totaled $5.3 trillion, an increase of $318 billion (6%) compared to the same period last year, which was largely due to the impact of higher interest costs, inflation adjustments to transfer payments, and increases in defense expenditures. It was noted that receipts would have been 9% higher year-over-year after adjusting for the effects of FY2023 and FY2024 tax deferrals. After adjusting for assorted calendar impacts, outlays would have been 5% higher year-over-year.
Pietrangeli then turned to privately-held net marketable borrowing projections, noting that the latest estimates from the primary dealers suggest that current auction sizes leave Treasury well positioned for the remainder of FY2025, while larger gaps are forecasted in FY2026 and FY2027. He also indicated that dealers continued to voice uncertainty regarding borrowing needs, citing the path of monetary and fiscal policy, as well as the economic outlook.
Debt Manager Stachura reviewed primary dealers’ expectations for coupon issuance, noting the unanimous expectation that nominal coupon issuance would remain unchanged at the August refunding. Primary dealers broadly expect coupon issuance to increase sometime in 2026 or later. With respect to Treasury Inflation-Protected Securities (TIPS), most dealers anticipated that the size of the August 30-year TIPS reopening would remain unchanged, but that the size of the September 10-year TIPS reopening and the October 5-year TIPS new issue would each increase by $1 billion.
Deputy Director Katzenbach then reviewed primary dealers’ feedback on Treasury’s plan to rebuild the Treasury General Account (TGA) following the early-July increase in the debt limit. Dealers broadly felt that the plans outlined in Treasury’s special announcement from July 8 were reasonable and noted that initial increases in bill supply have been well-received by the market. Primary dealers suggested that there is ample demand to absorb the increase in bill supply with only modest volatility in money market rates, so long as Treasury proceeds at a gradual pace and concentrates supply in short-dated bills. The median primary dealer estimated that Treasury, in the current market environment, could increase bill supply by $260 billion over a month and by $600 billion over a quarter without causing significant price deviations in bills relative to fair value. Katzenbach noted that, under current fiscal forecasts, aggregate bill supply is projected to remain below its mid-February peak at least through the end of September 2025.
Debt Manager Chisholm then discussed primary dealers’ views on potential changes to the buyback program. The consensus among dealers was that increases to both 10- to 20-year and 20- to 30-year buybacks would be most beneficial for liquidity support. They also agreed that increasing the frequency of buyback operations would be supportive of liquidity and market-making. A few dealers recommended increasing liquidity support buybacks in the one-month to two-year sector with several dealers suggesting that there is scope to increase the size of cash management buybacks in the same sector. Dealers cautioned against reducing buyback maximums. Finally, dealers are largely satisfied with the current buyback process and platform, although some suggested that over the longer term Treasury could consider changes to the execution process, such as developing the capacity to conduct buybacks on a yield spread basis or as a switch to the on-the-run benchmark security.
The Committee then turned to the charge addressing potential enhancements to the buyback program. The presenting member explained that the broader Treasury market is functioning well but noted increased primary dealer inventories and higher offer-to-max ratios in long-end buybacks this year. The presenting member argued that 10- to 20-year and 20- to 30-year sectors could be considered for larger buybacks and that, in light of the relatively small effects on the maturity profile, Treasury has flexibility to adjust the program while still adhering to the overall objectives and parameters outlined at its inception last year. The presenting member proposed that yield-spread bidding or duration-neutral switches versus the on-the-run could enhance the quality of Treasury’s execution, particularly during periods of heightened volatility, but acknowledged that this potential enhancement would require systems changes and thus would be a longer-term build. Finally, the presenting member suggested that expanding counterparty eligibility could potentially improve buyback results, while also broadening Treasury’s insights into other market participants’ demands for secondary market liquidity. The Committee debated the merits of larger buybacks. Whereas some Committee members believed that buyback operations are currently appropriately sized, most recommended increasing the maximum operation sizes. Of those Committee members recommending an increase, approximately half proposed limiting increases to long-end operations and the other half argued for increases across all sectors.
The Committee adjourned at 11:45 a.m. for lunch.
The Committee reconvened at 1:00 p.m.
The Chair summarized key elements of the Committee report for Deputy Secretary Faulkender and followed with a brief discussion of recent market developments.
Finally, the Committee turned to its financing recommendation for the upcoming quarters and recommended that Treasury maintain nominal coupon and floating rate note (FRN) auction sizes at current levels. With respect to TIPS, the Committee recommended that Treasury continue with $1 billion increases to offering sizes at the 5- and 10-year tenors. Looking ahead, the Committee discussed when it may be appropriate for Treasury to adjust its forward guidance on maintenance of nominal coupon and FRN auction sizes. Committee members also briefly highlighted trends in investor demand and potential considerations for future increases in auction sizes.
The Committee adjourned at 2:10 p.m.
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Brian Smith
Deputy Assistant Secretary for Federal Finance
United States Department of the Treasury
July 29, 2025
Certified by:
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Deirdre Dunn, Chair
Treasury Borrowing Advisory Committee
July 29, 2025
Treasury Borrowing Advisory Committee Quarterly Meeting
Committee Charge – July 29, 2025
Fiscal Outlook
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.
Buybacks
In the May 2025 quarterly refunding statement, Treasury announced that it is evaluating a broad range of possible enhancements to the buyback program, such as: changes to maximum purchase amounts, buyback operation scheduling and frequency, security eligibility, maturity bucket composition, execution process, and counterparty eligibility. Please provide input on these or other possible enhancements to the buyback program.
What factors should Treasury consider in evaluating changes to maximum purchase amounts? Are there certain buyback sectors where either increases or decreases in purchase maximums are warranted? What changes to the buyback schedule, if any, should Treasury consider? Are there any other buyback enhancements not listed in the quarterly refunding statement that Treasury should consider?
Financing this Quarter
We would like the Committee’s advice on the following:
- The composition of Treasury notes and bonds to refund approximately $89.8 billion of privately-held notes and bonds maturing on August 15, 2025.
- The composition of Treasury marketable financing for the remainder of the July-September 2025 quarter.
- The composition of Treasury marketable financing for the October-December 2025 quarter.
