US Treasury deploys $950bn TGA cash to curb long-term bond yields
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The US Treasury activated its roughly $950 billion Treasury General Account cash reserve to support bond buybacks and curb rising long-term yields. The move lifted gold to $4,669 per ounce and gram gold to 7,219 lira. Treasury officials said the step aims to end market concerns about Federal Reserve support.
Key Facts
- The US Treasury raised its long-term bond buyback amount from $2 billion to at least $4 billion per operation.
- Treasury Secretary Scott Bessent said the TGA cash reserve of $950 billion will be used to finance the buybacks.
- Gold rose to $4,669 per ounce and gram gold to 7,219 lira after the Treasury's move.
- Treasury officials said no changes were made to the auction calendar and the process was transparent.
Treasury Financing Shift
The US Treasury activated its roughly $1 trillion Treasury General Account cash reserve held at the Federal Reserve to support bond buybacks and reduce market borrowing uncertainty. Two senior Treasury officials told CNBC that the TGA is among the resources that can be used for bond purchases. The Treasury General Account serves as the federal government's main cash account at the Fed and is financed by current tax revenues. Under Treasury Secretary Scott Bessent, the TGA rose to about $950 billion, compared with a target range of $550–600 billion during the Biden administration. Officials did not disclose the amount that could be used or the timing of a possible decision.
Market Reaction
Gold rose to $4,669 per ounce and gram gold jumped to 7,219 lira following the US move. The Treasury doubled its long-term bond buyback amount from $2 billion to at least $4 billion per operation to strengthen market liquidity. The buybacks are intended to pull down rising yields through direct purchases, but the expectation that they would be financed by short-term borrowing initially pushed yields higher on concerns about resource shortages. Treasury Secretary Scott Bessent said the $950 billion TGA cash reserve would be used, aiming to end market concerns that Federal Reserve support would be needed.
Policy Response
Treasury officials rejected criticism that the intervention undermines market guidance and predictability, stressing that no changes were made to the auction calendar. They said market participants were given sufficient preparation time before decisions and that the process was transparent. The liquidity provided through the TGA and falling long-term bond yields directly shape the Federal Reserve's room for maneuver on policy rate decisions.
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US Treasury deploys $950bn TGA cash to curb long-term bond yields
