Treasury May Tap Near-$1 Trillion General Account to Fund Expanded Bond Buybacks
Senior Treasury officials said the Treasury could use its General Account to finance larger purchases of off-run long-term securities, a move that could affect long-term yields.
The U.S. Treasury is considering using its General Account, which holds about $950 billion, to fund an expanded program of buying off-run long-term Treasury securities. The plan, announced last week, would double the minimum size of weekly buybacks from $2 billion to at least $4 billion.
Treasury Secretary Scott Bessent described the operation as a “Treasury Twist,” indicating that long-term bonds would be purchased while short-term Treasury bills would be issued to finance the purchases. Officials did not specify how much of the General Account would be used or when a decision might be announced, but they said the funds are available if needed.
Market participants have expressed skepticism about the effectiveness of the buybacks and the Treasury’s capacity to sustain them, causing yields to rise after an initial rally. Analysts noted that even a modest use of the General Account could signal the Treasury’s willingness to influence long-term rates.
The Treasury maintains that the use of the General Account would not alter its regular auction schedule, which remains unchanged. The first operation under the new plan is slated for Sept. 9, giving markets time to adjust. Bessent told CNBC that the Treasury aims to keep market conditions stable and focus on fiscal fundamentals rather than headline-driven trading.