Posted on 08/24/2026 6:37:39 AM PDT by Red Badger
Key Points
The Treasury could use its General Account to help fund purchases of government bonds, according to two senior Treasury officials.
Treasury Secretary Scott Bessent has built up the TGA to around $950 billion currently.
The Treasury surprised markets last week by doubling the size of bond buybacks, but the impact on yields was short-lived because of skepticism over the firepower available to Bessent.
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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, the 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 Treasurys are bought and paid for with short-term issuance. That also implied that short-term bonds would be sold.
But since the surprise announcement, bonds have retreated from an initial rally, sending yields higher, in part because of skepticism voiced by many market analysts about how effective the operation would be and whether the Treasury’s resources were too limited.
Using the TGA could change that perception. The TGA is essentially the government’s checking account, a rainy day fund of sorts held at the Federal Reserve. It is already funded with existing tax collections. Bessent has built up the TGA to around $950 billion currently, compared with a stated goal under the Biden administration of around $550 billion to $600 billion.
The officials would not say how much, if any, of the TGA would be used or when such an announcement could be made. There was no implication it could be used beyond the purchase of off-the-run securities that were the focus of last week’s announcement.
But they were clear that it is considered to be available.
Don’t need the Fed’s help
The TGA’s size is discretionary. When Janet Yellen ran the Treasury, officials said the goal was to set the TGA at a “week ahead of cash needs.” The current Treasury says it sets the account “consistent with Treasury’s long-standing cash balance policy.” Assuming any of it is used, and the Bessent Treasury wanted to maintain the near $1 trillion level, additional bonds would have to be sold to build it back up.
But running it somewhat lower would not appear to entail any immediate risk. Reducing the TGA would mean the government would have less cash on hand in the event of a new debt ceiling impasse. But the latest estimates are that a new limit won’t be hit until the winter of next year and perhaps not until the early spring. That would give time to build it back up if needed. Meanwhile, bond yields could be influenced by even a small use of the TGA or even just the recognition that the Treasury would use it to buy government bonds.
It also would limit any concern, also voiced by some bond market participants, that the Fed could be asked to help the Treasury in such operations. (The Fed holds the TGA like a bank, but does not consider it part of its monetary policy toolkit.)
The Treasury officials pushed back on criticism that the Treasury, in its surprise announcement, had abandoned its long-standing practice of being “regular and predictable” about bond sales and that it was gaming the market. The announcement of the enhanced buybacks came two weeks after the quarterly refunding announcement, when such information would normally be relayed to markets.
But the senior officials said that no change had been made to the actual official auction schedules. They added that the announcement was made nearly three weeks before the first operation will take place on Sept. 9, giving markets time to prepare. The Treasury also announced the plan for the entire quarter in its Aug. 19 announcement.
They added that since the first auction is not scheduled until Sept. 9, it was too early to judge the market impact.
Bessent told CNBC last week that the Treasury’s intent was to get the market to “focus on the fundamentals and not trade the headlines during … a quiet period in a thin market. So we are trying to keep the market in equilibrium.”
He said he expected progress in the deficit when tariff revenue returns after court-mandated refunds are replaced by new tariffs. And he said that top officials would be meeting soon to forge plans that would improve the fiscal situation.
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Ah, THATS that account that has a spare $1 trillion.
We’re 40+ TRILLION DOLLARS in debt...............
Offsetting any Treasury purchase of bonds are the billions of bonds being issued by the Artificial Intelligence folks to build all of the AI Data Centers/supporting Infrastructure.
Fun fact:
In 1991, George Soros had a simple idea: the pound was overvalued relative to the deutschmark.
He began betting against it while the Bank of England kept proclaiming the pound’s underlying strength (despite Britain’s economic weakness.)
The more the Bank kept defending the currency, the more Soros bet against it. Eventually he was proven right and made billions from the trade.
You know who headed Soros’ trading desk in London when he scored this monumental coup?
Scott Bessent.
The lesson is that markets in the long term are not susceptible to government or central bank manipulations and interventions: rates will go where the market dictates.
I think all this maneuvering by Treasury will be for naught.
Please explain how Gov. Bonds and Corporate Bonds especially for Data Centers is connected.
This is just to get them past the Midterms in an attempt to keep the Congress still Republican..........
The question for me is, if the Treasury has an account with a trillion dollars in it, which I don’t actually believe, then why are they issuing any bonds at all?...............
That’s months away, and the bond market won’t be on hold till November 3.
< At least, that's what I think is happening
* Bessent joined Soros’s Management Fund in 1991.
* From 1991–2000, he was managing partner of Soros Fund Management’s London office.
* He was a key member of the team behind Soros’s famous 1992 bet against the British pound (“Black Wednesday”), which made the fund more than $1 billion.
* Bessent later returned to Soros Fund Management in 2011 as chief investment officer, a position he held until 2015.
So if you heard that Bessent “ran Soros’s trading desk in London,” that’s essentially correct.
Well, it seems that money always trumps (no pun intended) philosophy and politics. Oh well.
Converting long term debt to short term doesn’t seem like a good plan.
Would you pay off your mortgage with a credit card?
Since mortgages are usually tied to 10 year rates, this will not help lower mortgage rates, and may even put upward pressure on them.
Fun Fact ... Miami Rebel spouting leftist talking points, again. Your post mimics, almost verbatim, what all of the leftists outlets are putting out there.
Here’s another take ...
MJTruthUltra
@MJTruthUltra
·
This is pretty fascinating…
Scott Bessent says George Soros crashed the U.S. Market on Election Night 2016, and lost BIG against Trump
I missed this interview, but I’ve never heard Scott Bessent talk about George Soros before. Here he discusses working for him over two separate stints that totaled roughly 15 years.
He said his job for him was purely on the investment side and never on the foundation side. Those were kept very separate.
During the first stint, he says George Soros was actually very helpful in bringing down the Iron Curtain and contributing to the collapse of the Soviet Union.
After Bessent left, he says that sometime in the early 2000s Soros became much more focused on domestic policy.
On election night 2016, Bessent says the market CRASHED and it was one of the greatest buying opportunities of all time because of how pro-business Trump was. So he personally bet big on Trump.
He later found out that George Soros was the one selling the market—he was crashing it—and lost several billion dollars doing it.
What better man with such intimate financial knowledge of George Soros’ operations is there who knows exactly where to look to dismantle Antifa and other networks?
Was this the plan all along?
https://x.com/MJTruthUltra/status/2088277146007441522?s=20
My “talking point” is financial, not political.
Markets cannot be held in check because the emperor (or the central bank or the exchequer) tells them to behave in a prescribed way.
The move to throttle long-term rates is not sustainable.
We started the year at 4.169% on the ten-year. We’re at 4.705% currently.
In addition to our ballooning deficits, the markets will have to absorb over half a trillion in new issuances by tech companies to fund data centers and AI expansion.
This will not end well, and throwing money at the 30-years won’t turn the tide.
Bessent’s personal experience in bursting a bubble is being cast aside out of political expediency.
I’ll bet Soros hasn’t stopped trying to crash the US markets.
He was just posting facts. Bessent was really talented taking advantage of market dislocations when he was just a “player”, but now that he can try and manipulate them himself, he must really love it.
My credit card would explode...............
“””Please explain how Gov. Bonds and Corporate Bonds especially for Data Centers is connected.”””
When supply of Gov and Corporate Bonds exceeds the demand for such bonds, the price of those bonds go down and the interest rates go up.
We currently have a huge supply of Corporate bonds in today’s market to finance AI Infrastructure.
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