The U.S. Treasury is considering tapping its massive General Account to help fund an expanded program of government bond purchases, according to two senior Treasury officials.
Treasury Secretary Scott Bessent has built the TGA up to approximately $950 billion, far exceeding the $550 to $600 billion target maintained under the Biden administration.
The TGA functions as the government’s primary checking account, a reserve of sorts held at the Federal Reserve and already funded through existing tax collections.
Markets were caught off guard last week when the Treasury announced it would double the size of buybacks of off-the-run long-end securities, lifting the minimum from $2 billion to at least $4 billion.
Bessent told CNBC the operations could be even larger than the new higher minimum, describing the effort as a “Treasury Twist,” referencing operations where long-term bonds are purchased and offset with short-term issuance.
Despite an initial rally following the announcement, bonds quickly retreated and yields climbed higher, with many market analysts expressing skepticism about the Treasury’s available firepower.
Using the TGA could significantly change that perception, giving Bessent a substantial and already-funded tool to influence long-term yields without relying on new short-term bill sales alone.
The two senior Treasury officials confirmed the TGA is considered available for such purposes, though they would not specify how much could be used or when any formal announcement might come.
Officials were also clear that no changes had been made to official auction schedules, and they noted the enhanced buyback plan was disclosed nearly three weeks before the first operation, scheduled for Sept. 9.
Deploying TGA funds would also put to rest concerns voiced by some bond market participants that the Federal Reserve might be drawn into supporting Treasury operations, a scenario officials appear keen to avoid.
The Fed holds the TGA in a banking capacity and does not consider it part of its monetary policy toolkit, a distinction that matters as Bessent works to maintain the independence of the two institutions.
Running the TGA somewhat lower than its current level does not appear to carry immediate risk, with the latest estimates suggesting a new debt-ceiling limit would not be hit until winter or early spring of next year.
Bessent said last week that the Treasury’s intent was to get the market to “focus on the fundamentals and not trade the headlines during a quiet period in a thin market,” adding, “we are trying to keep the market in equilibrium.”
He also said he expected deficit progress once tariff revenue returns after court-mandated refunds are replaced by new tariffs, and that top officials would soon meet to develop plans to improve the overall fiscal situation.
