The US Treasury is considering using its near $1 trillion General Account to fund an expanded programme of government bond purchases, according to two senior Treasury officials.
Treasury Secretary Scott Bessent has grown the TGA to approximately $950 billion, significantly above the $550 billion to $600 billion target maintained under the Biden administration.
The Treasury last week surprised markets by announcing 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 per operation.
Bessent told CNBC that operations could exceed even the new higher minimum, describing the strategy as a “Treasury Twist” in reference to operations where long-term bonds are purchased using short-term issuance.
Bond markets initially rallied on the announcement but quickly retreated, sending yields higher amid widespread scepticism from analysts about the Treasury’s available firepower to sustain the programme.
Using the TGA, which functions as the government’s primary checking account held at the Federal Reserve and funded through existing tax collections, could materially shift that market perception.
The two senior officials declined to specify how much of the TGA might be deployed or when a formal announcement could be made, but confirmed clearly that the account is considered available for this purpose.
Reducing the TGA balance would leave the government with less of a cash buffer in any future debt ceiling standoff, though current estimates suggest a new limit would not be reached until late winter or early spring of next year.
Officials also pushed back firmly against criticism that the Treasury had abandoned its longstanding commitment to being “regular and predictable” in its bond market communications by making last week’s announcement outside the standard quarterly refunding process.
Senior officials argued that no changes had been made to official auction schedules and that the first buyback operation, not scheduled until 9 September, gave markets nearly three weeks to prepare and assess the plan.
The officials also moved to address concerns raised by some bond market participants that the Federal Reserve could be drawn into supporting the operations, noting that while the Fed holds the TGA, it does not consider the account part of its monetary policy toolkit.
Bessent told CNBC 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 said he expected deficit progress once tariff revenue resumes following court-mandated refunds being replaced by new tariffs, and indicated senior officials would be meeting soon to develop plans aimed at improving the broader fiscal position.