Bessent eyes trillion-dollar "emergency fund pool" to support expanded government bond purchase program

Odaily News, according to CNBC, two senior U.S. Treasury officials revealed that the U.S. Treasury may tap the General Account (TGA), which holds close to $1 trillion, to fund its recently announced expansion of the government bond purchase program. Using the TGA would give the Treasury greater capacity to influence long-term bond yields.

Last week, the U.S. Treasury unexpectedly announced it would raise the buyback size for long-dated "off-the-run securities" from $2 billion to at least $4 billion. Treasury Secretary Bessent stated that the scale of such operations could even exceed this new minimum level. However, the Treasury did not specify at the time how these purchases would be funded. Most market participants had previously assumed the Treasury would raise funds by increasing issuance of short-term bills (T-bills). If the TGA is tapped, market perceptions of this program could shift. The TGA is essentially the U.S. government's "checking account" at the Federal Reserve, akin to a government emergency fund pool. The funds in this account are already derived from existing tax revenue. (Jin Shi)