Scott Bessent could use the US Treasury’s nearly trillion cashpile to fund bond buybacks and influence long-term Treasury yields.

Updated on: Aug 25, 2026, 16:56:23 IST

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US Treasury Secretary Scott Bessent could use the government’s nearly $1 trillion cash account to help fund plans to buy government bonds. The money is held in the Treasury General Account (TGA) at the Federal Reserve. The account works like the US government’s checking account and is funded through existing tax collections.

The Treasury has built the TGA to around $950 billion, much higher than the roughly $550 billion to $600 billion level targeted during the Biden administration, according to a CNBC report citing two senior Treasury officials. Using some of this cash could give the Treasury more power to influence long-term US bond yields, especially if investors believe the government has more money available for bond purchases.

Treasury doubles bond buybacks

The Treasury recently surprised financial markets by announcing that it would double its buyback operations for older government bonds. The Treasury increased the minimum size of its purchases of longer-term, off-the-run securities from $2 billion to at least $4 billion, according to CNBC.

Bessent later told CNBC that the purchases could be even larger than $4 billion. The Treasury did not explain how it would pay for the bigger purchases when it made the announcement. Many investors assumed the Treasury would raise money by selling more short-term Treasury bills. Bessent described the plan as a “Treasury Twist.” The term refers to an operation in which long-term government bonds are bought while short-term debt is issued to help pay for them.

Treasury could use its cash

The senior Treasury officials did not rule out using short-term debt sales to fund the purchases. However, they also made it clear that the TGA is available for the bond-buying operation, CNBC reported. The officials did not say exactly how much of the nearly $1 trillion account could be used. They also did not say when the Treasury could announce any decision to use the cash.

The officials indicated that any use of the TGA would be linked to the off-the-run securities covered by the Treasury’s latest buyback announcement. Even a relatively small use of the TGA could change how investors view the Treasury’s ability to support the bond market.

Why the cashpile matters

US government bonds initially rallied after the buyback announcement, but that rally later faded and bond yields moved higher. Some market analysts questioned whether the Treasury’s buyback plan would be large enough to have a meaningful impact on the bond market.

There were also concerns about whether the Treasury had enough resources to make the operation powerful enough. Using the TGA could help answer some of those concerns because it would give the Treasury another source of money for the purchases. The TGA is a cash reserve held by the Treasury at the Federal Reserve. It gives the government money that can be used to meet its financial needs.

Treasury does not need Fed money

The Treasury’s cash balance is not fixed and can change depending on the government’s needs. When Janet Yellen was Treasury secretary, officials had said the goal was to keep enough money in the TGA to cover about one week of cash needs. The current Treasury says it manages the account in line with its long-standing cash balance policy.

If the Treasury uses some of the TGA and later wants to return the account to nearly $1 trillion, it would need to raise more money by selling bonds. However, using some of the cash would not necessarily create an immediate problem, according to a CNBC report.

A smaller TGA would mean the government would have less cash available if it faced another fight over the federal debt ceiling. But current estimates suggest the US is not expected to reach the new debt limit until winter next year or possibly early spring, giving the Treasury time to rebuild its cash balance if needed.

This means the Treasury could potentially use some of its cash now while still having time to prepare for future debt-ceiling needs. The possibility of using the TGA could also reduce concerns that the Federal Reserve might be asked to help with the Treasury’s bond-buying operation. The Federal Reserve holds the TGA for the Treasury like a bank, but the Fed does not consider the account part of its monetary policy tools.

Treasury defends surprise announcement

Some bond market investors criticized the Treasury’s surprise announcement because they believed it moved away from the government’s long-standing practice of being “regular and predictable” with its debt sales. Some investors also accused the Treasury of trying to influence or game the market with the timing of the announcement.

Treasury officials rejected that criticism. They said the government had not changed the official auction schedules for Treasury debt. The officials also pointed out that the first new buyback operation will not take place until September 9, giving investors almost three weeks to prepare after the August 19 announcement, according to a CNBC report.

The Treasury also announced the plan for the full quarter on August 19, according to the officials. They said it was still too early to judge the effect of the buyback plan because the first operation has not happened yet.

Bessent’s message to markets

Bessent said the Treasury wanted investors to focus on the fundamentals instead of reacting to headlines, especially during a period when trading activity in the market was relatively low. Bessent said the Treasury was trying to keep the market in equilibrium. He also said he expected the US fiscal situation to improve as tariff revenue returns.

The expectation is linked to court-ordered tariff refunds, which would be followed by revenue from new tariffs, Bessent said. Bessent also said senior government officials would soon meet to discuss plans to improve the US fiscal situation, according to a CNBC report.

For now, the Treasury has not committed to a specific amount from the TGA for bond buybacks. But the account’s nearly $1 trillion balance gives Bessent another potential source of funding as the government looks to expand its purchases of longer-term Treasury securities.

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