Treasury Explores TGA Tap for Bond Buybacks as Bessent Signals Expanded 'Treasury Twist'

U.S. Treasury Secretary Scott Bessent is signaling an expanded toolkit to support long-end Treasury markets, including the potential use of the nearly $1 trillion Treasury General Account (TGA) to fund increased bond buybacks. Two senior Treasury officials told CNBC that the TGA—essentially the government's checking account at the Federal Reserve, currently holding around $950 billion—could provide firepower for purchases without relying solely on new short-term bill issuance. This follows last week's announcement doubling liquidity support buybacks on longer-dated securities to at least $4 billion per operation starting September 9. Bessent has referred to the approach as a 'Treasury Twist,' echoing historical Fed operations that swap short-term for long-term debt to influence yields. Market reaction included modest curve flattening, with short-end yields rising and long-end declining slightly, alongside bids in gold and Bitcoin. While the scale remains small relative to $40+ trillion in public debt, analysts note it could add modest inflationary pressure by drawing down existing cash reserves rather than purely extending duration through bill sales. The Treasury has not ruled out supplementary bill issuance and emphasized the moves aim at liquidity support amid elevated long-term yields. Official Treasury announcements and quarterly refunding statements confirm the buyback expansions, with TGA balances projected to peak near or above $1 trillion in coming periods.