Treasury Considers Tapping $950B Cash Reserve for Bond Buybacks

The US Treasury Department is considering drawing on its cash reserve to fund its expanded bond buyback program. The reserve, known as the General Account or TGA, holds around $950 billion and would be used exclusively for buying off-the-run securities.

Treasury Secretary Scott Bessent told CNBC that the 'Treasury Twist' plan could see even larger buybacks in the future. The first operation under the new plan is scheduled for September 9, with a minimum purchase amount of $4 billion per operation.

Using the TGA would likely calm market skepticism about the buyback plan and reduce concerns that the Federal Reserve might be asked to help fund it. However, officials note that reducing the TGA's balance would leave less cash on hand in case of a debt ceiling impasse.

Bessent stated that the goal is to keep the market 'in equilibrium' and focus on fundamentals rather than trading on headlines. The Treasury sees the deficit improving as new tariffs replace court-ordered refunds, bringing back tariff revenue.