Let's See Who Is On The Treasury Borrowing Advisory Committee (TBAC)

As everyone is I am sure well aware by now, Treasury is going to give its Quarterly Refunding Announcements this week which will go through the total amount of borrowings the Treasury will do for the 2Q and 3Q, the expected level of quarter ending cash in the Treasury General Account and the composition of issuance between bills and bonds. There have been plenty of takes about what Janet will do here, how political she will or won’t be and why she should or shouldn’t issue more bonds vs bills. Everyone has a take. Many of them are bad. I have my own take. If you want the best take around, you should refer to the work of Andy Constan at Damped Spring.

What perhaps folks don’t realize is that there is a committee which advises the Treasury on what to do. It is called the Treasury Borrowing Advisory Committee (TBAC for short). Here is what they do:

 “The TBAC is an advisory committee governed by federal statute (the Federal Advisory Committee Act and the Government Securities Act) that meets quarterly with the Treasury Department. The TBAC’s membership is comprised of senior representatives from a variety of buy and sell side institutions, such as banks, broker-dealers, asset managers, hedge funds, and insurance companies. The TBAC presents their observations to the Treasury Department on the overall strength of the U.S. economy as well as providing recommendations on a variety of technical debt management issues.” 

Yes, that’s correct. You read that right. This committee that advisors the Treasury is made up of the largest market participants around including various hedge funds that are very actively participating in UST basis trades which have become all the rage. While I don’t really want to get into conspiracy theories on a Friday afternoon, I think it is fair to say that most of these market participants are broadly incentivized when risk assets go up and may have their own interests in mind rather than that of the country. Discuss amongst yourselves. Here are the members