Bessent may use near $1 TRILLION general Treasury account to fuel bond buybacks: report

Treasury Secretary Scott Bessent could tap into the near $1 trillion Treasury General Account (TGA) in order to fund the buyback of long-term government bonds, according to a report from CNBC.

The report, citing two Treasury officials, says that the move would allow Bessent more influence on long-term bond yields. A bond buyback would likely push up bond prices as well as bring yields down with the added demand from the Treasury's expanded buyback. 

Last week, the Treasury said that it would be doubling the size of the per-operation cap on long-term bond buybacks from $2 billion to at least $4 billion. However, at the time, the Treasury did not say what would be funding the purchases. Some in the markets had assumed that the Treasury would fund the buyback by issuing shorter-term bonds, which usually mature in a year. The announcement drew a rally in the bond market which has since retreated after there was skepticism from some in the market wondering if the Treasury's resources would be too limited to fund the expansion. 

If the Treasury were to use the TGA, that would change those perceptions. The TGA is something akin to a rainy-day fund held by the government at the Treasury. Bessent has built it up to $950 billion after the goal of the Biden administration was to have it standing at around $550 to $600 billion.

The campaign from Bessent to buy up the long-dated government bonds would push down long-term yields in the market.

Treasury officials told CNBC that they have not ruled out using shorter-term bills to fund the buyback expansion but said that the TGA could be used. They did not specify how much could be used from the TGA.