US Treasury Weighs Using Nearly $1T Cash Buffer for Bond Buybacks to Ease Long-Term Yields

The US Treasury is weighing whether to tap nearly $1 trillion held in its main checking account to help pull down long-term borrowing costs, as 30-year yields hover near 5.3% and federal debt tops $40 trillion. The proposal centers on deploying funds from the Treasury General Account (TGA)—the federal government's primary operating account—to finance buybacks of 10- to 30-year Treasuries. Officials are looking for measures that can influence the yield curve without requiring congressional action on the deficit. On August 19, Treasury Secretary Scott Bessent's team said it would at least double the minimum size of its liquidity-support buyback operations. The minimum would rise from $2 billion to $4 billion per operation, with scope for larger transactions. The buybacks are designed to focus on longer-dated securities, and the program is scheduled to begin September 9. Treasury officials have not specified how much of the TGA—currently estimated at roughly $950 billion to $1 trillion—they plan to use or over what period. The approach has been described as a form of "Treasury Twist," aimed at shifting the maturity profile of outstanding debt rather than changing the overall amount. Unlike the Kennedy-era Operation Twist, which involved the Federal Reserve selling short-term securities and buying long-term bonds, this version would bypass the Fed and rely on Treasury cash. Market response to the announcement was limited. Yields on 10-year and 30-year Treasuries fell about 3.5 to 4.5 basis points, while gold advanced. Treasury sources have suggested prior, smaller buyback efforts only produced brief declines in yields before markets reversed, fueling hopes that larger operations backed by a nearly $1 trillion cash balance could have a more lasting impact. Budget math remains a constraint. Using cash to repurchase bonds does not reduce the federal debt or the deficit. As the TGA balance falls, the Treasury ultimately needs to rebuild the account through higher tax receipts or additional issuance. More supply could place upward pressure on yields again. For borrowers, any near-term benefit would likely be incremental. Lower long-term Treasury yields can feed into mortgage rates, corporate bond pricing, and other lending benchmarks across the economy.