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 Minutes of the Meeting of the Treasury Borrowing Advisory Committee of the Securities Industry and Financial Markets Association November 1st



The Committee convened in a closed session at the Hay Adams Hotel at 10:36 a.m.  All members except Christine Hurtsellers were present. Counselor to the Secretary Antonio Weiss, Acting Assistant Secretary for Financial Markets Daleep Singh, Deputy Assistant Secretary for Federal Finance James G. Clark and Director of the Office of Debt Management Fred Pietrangeli welcomed the Committee.  Other members of Treasury staff present were Deputy Director John Dolan, Dave Chung, Jared Roscoe, Michael Puglia, Tom Katzenbach, Chris Cameron, Kanna Nakamura, and Tillman Elser.  Federal Reserve Bank of New York staff members Nathaniel Wuerffel, Ellen Correia Golay, and Jonathan Hill were also present. 

Deputy Assistant Secretary Clark began with an overview of the fiscal outlook, highlighting that corporate tax receipts have decreased year-over-year but that individual income tax receipts have remained fairly level.  DAS Clark proceeded to note that Treasury’s net expenditures rose as compared to the prior fiscal year; this increase in outlays was largely attributable to increased Health and Human Services (HHS) payments, which include a calendar effect that shifted payments from October into September. 

In contrast to the year-over-year growth in financing needs during FY 2016, which included a $155 billion increase in the cash balance, DAS Clark highlighted that borrowing is expected to decline over the coming year: net marketable borrowing totaled $795 billion in FY 2016, whereas OMB projects borrowing from the public will be $573 billion in FY 2017.  DAS Clark indicated that the amount of net borrowing required over the coming years will be influenced by the Federal Reserve’s reinvestment policy for its SOMA portfolio.  DAS Clark concluded by noting that Treasury’s FY 2017 Q2 borrowing estimates assumed a $100 billion cash balance at the end of March 2017.

Next, the Committee turned to a presentation on the demand for Treasury bills and other high quality liquid assets following money market mutual fund (MMF) reforms implemented in October 2016.  The presenting member began by highlighting that prime fund assets under management have declined by more than $1 trillion year-over-year, with approximately a dollar-for-dollar increase in government-only fund assets.  The presenting member also noted that the supply of commercial paper has decreased alongside the reduction in prime fund assets and that short-term funding costs for foreign banks have increased.

The presenting member then turned to the effect that MMF reform implementation has had on the demand for Treasury bills.  Consistent with guidance provided at the May 2015 Quarterly Refunding, the presenting member noted that Treasury has increased the supply of bills meaningfully over the past year.  However, the presenting member noted that the increase in demand for bills resulting from the shift in prime to government-only assets is likely to be structural and therefore supportive of additional Treasury bill issuance.  One member noted that demand for Treasury bills as a source of collateral for margin posting purposes is likely to increase as well.  Projections indicate that an increase in bill supply should be possible over the short term, without any adjustments to coupon sizes. 

The presenting member noted that disruptions to the supply of bills could be significant in 2017, absent a timely resolution to the debt limit.  It was the view of the Committee that structural changes in the market were broadly supportive of increasing bill supply.  The Committee unanimously agreed that Treasury should undertake further analysis regarding the appropriate level of bills outstanding in light of these structural changes while still continuing to extend the average maturity of debt.

The Committee adjourned at 1:00 p.m. for lunch.

The Committee reconvened at the Department of the Treasury at 5:00 p.m.  All Committee members except Christine Hurtsellers were present.  The Chair presented the Committee report to Secretary Lew.

A brief discussion followed the Chair’s presentation but did not raise significant questions regarding the report’s content.

The Committee then reviewed the financing for the remainder of the October through December quarter and the January through March quarter (see attached).

The meeting adjourned at 6:00 p.m.







James G. Clark
Deputy Assistant Secretary for Federal Finance
United States Department of the Treasury
November 1, 2016


Certified by:




Jason Cummins, Chairman
Treasury Borrowing Advisory Committee
Of The Securities Industry and Financial Markets Association
November 1, 2016




Stuart Spodek, Vice Chairman
Treasury Borrowing Advisory Committee
Of The Securities Industry and Financial Markets Association
November 1, 2016










Treasury Borrowing Advisory Committee Quarterly Meeting

Committee Charge – November 1, 2016


Fiscal Outlook

Taking into consideration Treasury’s short, intermediate, and long-term financing requirements, as well as uncertainties about the economy and revenue outlook for the next few quarters, what changes to Treasury’s coupon auctions do you recommend at this time, if any?    


Post-Money Market Fund Reform Outlook on Demand for Treasury Bills

Money Market Fund Reform rules were implemented on October 14. Given that these reforms are now effective, we would like for the Committee to assess, over the short and intermediate term, the market’s demand for Treasury bills and other high quality liquid assets.  How has demand shifted among the short-term products available to investors and what are the implications for entities that rely on short-term funding? Given Treasury’s projected borrowing need what, if any, changes to the existing auction schedule should Treasury consider in response to changes in demand for HQLA and Treasury bills?


Financing this Quarter

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

  • The composition of Treasury notes and bonds to refund approximately $58.5 billion of privately-held notes maturing on November 15, 2016.
  • The composition of Treasury marketable financing for the remainder of the October-December 2016 quarter, including cash management bills.
  • The composition of Treasury marketable financing for the January-March 2017 quarter, including cash management bills.
TBAC Recommended Financing Table Q4 2016 and TBAC Recommended Financing Table Q1 2017
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