The Treasury could use its near $1 trillion General Account to help fund its recently announced plans to increase purchases of government bonds, according to two senior Treasury officials.
Using the TGA would provide the Treasury with considerable firepower to influence long-term bond yields
The Treasury surprised markets last week with an announcement that it would be doubling the size of buybacks of off-the-run securities on the long end from $2 billion to at least $4 billion. Treasury Secretary Scott Bessent said on CNBC such operations could be even larger than the new higher minimum. However, Treasury made no mention of how it would fund the purchases.
Most market participants assumed it would do so by selling short-term bills. The senior Treasury officials did not rule that out. Bessent in the CNBC interview called the operation a “Treasury Twist,” a reference to a government or Federal Reserve operation where long-term treasuries are bought and paid for with short-term issuance.