Treasury Considers Tapping $1 Trillion Cash Pile to Stabilize Government Debt

The US Treasury is exploring ways to tap its $1 trillion cash pile to finance an escalating effort to stabilize long-term government debt. The Treasury General Account, which has grown to about $940 billion as of last Wednesday, could help fund expanded bond buybacks.

Treasury Secretary Scott Bessent said purchases could rise beyond the new $4 billion level, aimed at improving liquidity in parts of the Treasury market strained by thin summer trading and heavy corporate issuance. The intervention comes as the underlying financing burden continues to grow, with US national debt crossing $40 trillion last week.

Bond yields have climbed sharply since August 19, when the department unexpectedly announced it would double liquidity-support buybacks for 10- to 30-year securities to $4 billion per operation. The 30-year Treasury yield had climbed as high as 5.337%, its highest since 2007, before falling after the announcement.

Bitcoin has gained roughly 27% in August, putting it on course for its best August since 2017. The cryptocurrency's breakout extends beyond the dollar, with gold rallying alongside it as investors revive the so-called debasement trade.