The Treasury Borrowing Advisory Committee (TBAC) is a statutorily‑governed advisory group that meets regularly with Treasury debt managers to provide independent market and financing advice (e.g., on issuance size and instruments). Its membership is senior representatives from both buy‑side and sell‑side institutions — banks, broker‑dealers, asset managers, hedge funds, insurance companies, etc. — who serve in their professional capacities.
Primary dealers are the Federal Reserve Bank of New York’s designated trading counterparties (mostly broker‑dealers and banks) that must participate in Treasury auctions and make markets in Treasuries. Their forecasts matter because they are major purchasers/intermediaries in Treasury auctions and secondary markets and provide market intelligence that Treasury uses when setting issuance plans and marketable‑borrowing estimates.
The System Open Market Account (SOMA) is the Federal Reserve’s portfolio of securities acquired in open‑market operations. SOMA holdings affect Treasury financing because Treasuries held in SOMA are not counted as privately‑held marketable debt (rollovers of SOMA holdings are treated as ‘add‑ons’), and SOMA redemptions or decisions not to roll over maturing SOMA securities can increase the privately‑held borrowing Treasury needs to issue.
A SOFR‑indexed floating rate note (FRN) is a Treasury security whose periodic coupon resets based on the Secured Overnight Financing Rate (SOFR), so the interest paid varies with short‑term market rates. That differs from Treasury bills (short‑term, sold at a discount and effectively zero‑coupon) and nominal coupon Treasuries (fixed coupon payments over the life of the security).
A “reopening” is issuing additional amounts of an existing Treasury issue (same CUSIP) after the original auction, rather than creating a new, separate coupon line. Issuing 7‑year notes with two reopenings means Treasury would auction a new 7‑year issue and later auction two additional amounts of that same issue to increase its outstanding size.
TIPS (Treasury Inflation‑Protected Securities) are Treasury securities whose principal adjusts with changes in the Consumer Price Index (CPI); interest is paid on the inflation‑adjusted principal, so investors receive inflation protection. Nominal Treasuries pay fixed-dollar coupons and do not adjust principal for inflation, so TIPS protect real purchasing power while nominals do not.
Privately‑held net marketable borrowing is the amount of marketable Treasury debt the Treasury must issue into private hands (excluding securities held/rolled over within the Fed’s SOMA). A $1.1 trillion shortfall for FY2027‑28 means, at current issuance plans, dealers expect private demand or available financing to be insufficient by that amount — implying Treasury would need to change issuance, reduce cash balances, or otherwise adjust financing to cover that gap.