Washington considers using $1T from Treasury to suppress bond yields

The US Treasury Department is eyeing nearly $1 trillion sitting in its own checking account as a tool to push down long-term bond yields. The plan: use the Treasury General Account to fund buybacks of 10- to 30-year government bonds. With federal debt now exceeding $40 trillion and 30-year Treasury yields climbing to nearly 5.3%, Washington is reaching for solutions that don’t require Congress to do anything about the deficit. The mechanics of the Treasury twist The TGA, which functions as the federal government’s primary operating account, currently holds between $950 billion and $1 trillion. Treasury Secretary Scott Bessent’s team announced on August 19 that it would at least double the minimum size of its liquidity-support buyback operations. The floor moves from $2 billion to $4 billion per operation, with the door open for even larger amounts. These operations focus specifically on 10- to 30-year securities. The program is slated to kick off on September 9. Treasury officials have been deliberately vague about precisely how much of the TGA they intend to deploy and over what timeframe. This approach has been described as a variant of the “Treasury Twist,” a strategy that resha...