Report: Bessent may use nearly 1 trillion dollars from treasury accounts to provide funding for bond repurchases

The US Treasury is considering tapping into its Treasury General Account (TGA), which is close to 1 trillion dollars, to provide funding support for expanding its government bond repurchase program. If implemented, this move will significantly change the market's assessment of the Treasury's ability to intervene in long-end interest rates.

According to CNBC, citing two senior Treasury officials, the TGA has already been viewed as a potential funding source. Treasury Secretary Scott Bessent has currently accumulated the TGA balance to around 950 billion dollars, far above the Biden administration's target level of 550 to 600 billion dollars. Last week, the Treasury announced it would double the repurchase scale of long-end off-the-run securities from 2 billion dollars each time to at least 4 billion dollars, surprising the market. In an interview with CNBC, Bessent stated that the actual operation scale might even exceed this new minimum.

However, last week's unexpected announcement did not specify the funding source, causing the bond market to rebound initially before quickly pulling back, with yields climbing again. Several market analysts have questioned the Treasury's actual intervention capability, believing that its available resources are limited. The potential involvement of the TGA may reverse the market's pessimistic assessment of this operation.

More updates to follow…