U.S. Treasury Secretary Scott Bessent is considering using the department’s nearly $1 trillion cash account to help fund expanded purchases of government bonds, a move that could give the Treasury another tool to manage rising long-term borrowing costs.
Two senior Treasury officials reportedly told that the Treasury General Account, or TGA, which holds roughly $950 billion, could finance bond buybacks. The officials said the account is considered available for purchases of older, less frequently traded Treasury securities, although they did not indicate how much could be deployed or when such a move might occur.
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The potential use of the TGA comes as the Treasury has expanded its bond-buyback program following a sharp rise in long-term government borrowing costs. Bessent said last week that the Treasury would increase purchases of longer-dated securities, with individual operations potentially exceeding $4 billion.
The Treasury plans to begin larger buybacks of 10- to 30-year bonds on Sept. 10. The strategy is intended to improve liquidity in the Treasury market and help address elevated yields that have increased the government’s cost of servicing its debt.
Using the TGA would allow the Treasury to purchase bonds without necessarily issuing additional short-term debt to raise the cash needed for the transactions. The account is the federal government’s primary operating account at the Federal Reserve and is used to manage government receipts and payments.
The possibility of using the cash reserve briefly pushed Treasury yields lower on Monday. The 10-year Treasury yield fell to about 4.70%, while the 30-year yield was around 5.24%, as investors assessed the potential for further Treasury intervention in the bond market.
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The move comes against a backdrop of mounting U.S. government debt and concerns about the sustainability of higher long-term interest rates. The Treasury has sought to support market liquidity while maintaining its regular debt-issuance schedule.
Bessent said the Treasury would continue with its planned auction schedule even as it increases bond buybacks. The department has not said definitively whether the TGA will be used to finance the purchases.
The strategy has also attracted skepticism from some market participants. Critics argue that the scale of the buybacks remains small compared with the enormous size of the Treasury market and the amount of new debt the government needs to issue. Others have questioned whether using a large cash reserve for bond purchases could create uncertainty about Treasury’s traditional approach to debt management.
The Treasury’s moves are also being closely watched ahead of the Federal Reserve’s annual economic symposium in Jackson Hole, where investors are looking for signals on the future path of interest rates.