Marina Lubimova
Treasury has already doubled minimum buybacks of longer-dated securities from $2 billion to $4 billion, while Treasury Secretary Scott Bessent has indicated that purchases could increase further.
| Metric | Amount |
| Treasury cash balance | ~$1 trillion |
| Previous long-end buyback | $2 billion |
| New minimum buyback | $4 billion |
| Increase | 100% |
| $4B as share of $1T cash | 0.4% |
| $50B deployment | 12.5× current $4B buyback |
| $100B deployment | 25× |
| $250B deployment | 62.5× |
The scale difference is substantial. Treasury would need to deploy only 5% of a $1 trillion cash balance to provide $50 billion for purchases, or 10% to provide $100 billion.
Why the TGA Matters
The Treasury General Account (TGA) is the government's cash account at the Federal Reserve. Using existing TGA cash to buy long-term bonds would allow Treasury to fund purchases without immediately issuing an equivalent amount of new debt.
The direct market effect would be:
Treasury cash → bond purchases → lower amount of long-duration debt held by private investors.
Reduced supply of long-duration securities can support bond prices and put downward pressure on long-term yields.
Treasury vs. Federal Reserve
The mechanism differs from Federal Reserve quantitative easing. The Fed purchases securities by creating reserves. Treasury would instead use cash already held in the TGA. That could allow the government to increase demand for long-term Treasuries without requiring a new Federal Reserve asset-purchase program.
There is also a liquidity effect. When Treasury spends money from the TGA, cash moves from its Federal Reserve account into the financial system, increasing bank reserves.
A large TGA-funded buyback could therefore simultaneously:
- reduce the amount of long-duration Treasury debt available to investors;
- increase banking-system liquidity;
- put downward pressure on long-term yields.
The Main Constraint
The full $1 trillion cannot realistically be used for buybacks. Treasury requires a substantial cash reserve for federal spending, debt payments and daily government operations. The relevant question is therefore how much of the balance could be deployed. At the current $4 billion buyback size, a $1 trillion balance is equivalent to 250 operations.
Even a $100 billion allocation would equal 25 current-sized buybacks. The scale of the TGA means Treasury does not need to deploy anything close to $1 trillion for the program to become materially larger.
The key numbers for the bond market are now $4 billion per buyback, nearly $1 trillion in Treasury cash, and the amount of that cash Bessent is prepared to use.
Marina Lubimova
