US Treasury May Use General Account to Fund Debt Buybacks, CNBC Reports

The U.S. Department of the Treasury is reportedly exploring the use of its Treasury General Account (TGA), which holds nearly $1 trillion, to finance its recently announced public debt buyback program. This potential strategy emerged from discussions between Treasury officials and CNBC.

Last week, the Treasury revealed its intention to double the volume of buybacks for long-term bonds, a move that coincided with yields on these securities reaching near two-decade highs. Secretary of the Treasury Scott Bessent further suggested that the buyback volume could be even greater. While officials did not rule out financing these buybacks through short-term bill sales, they acknowledged the TGA as an "available source of funds."

The TGA, essentially the U.S. government's checking account, has seen its balance swell to over $950 billion under Secretary Bessent's leadership. This figure is nearly double the $550 billion to $600 billion target set by the previous administration. The use of TGA funds for buybacks could potentially reduce the cash available to the government, though current estimates suggest a new debt limit crisis is unlikely until late 2027.

In response to criticism regarding the surprise announcement of the buybacks, Treasury officials emphasized that the plan was communicated nearly three weeks before the first operation on September 9. They also noted that the full quarterly plans were disclosed on August 19. The news of the potential TGA usage led to a slight decrease in bond yields, with 10-year Treasury yields falling to 4.698% and 30-year yields to 5.228% mid-session on Wall Street.

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an available source of funds