Treasury Weighs Tapping Near-$1 Trillion TGA for Bond Buybacks

The Treasury General Account is the US government’s main operating account at the Federal Reserve and held close to $1 trillion. Using part of that cash for Treasury buybacks could improve liquidity in older, less-traded securities, lift bond prices and temper long-term yields. The step would not be equivalent to Federal Reserve quantitative easing, however, and any drawdown may later have to be replenished through additional debt issuance.

The Treasury Department said on Aug. 19 it would raise the maximum size of liquidity-support buybacks for 10- to 30-year securities to at least $4 billion per operation from $2 billion, beginning Sept. 9 and running through November. Reports on Aug. 24 said officials were considering using the TGA to fund the larger purchases. The 10-year yield fell to 4.698% from 4.718%, while the 30-year yield eased to 5.236% from 5.255%, reviving speculation that looser liquidity could benefit bitcoin and other debasement hedges.