Bessent arms Treasury with $950B cash reserve as bond yields surge

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The Treasury may tap its roughly $950 billion General Account to help fund larger purchases of U.S. government bonds as long-term yields climb again.

Two senior Treasury officials reportedly said the cash is available. Treasury last week doubled planned buybacks of older, off-the-run long-dated securities from $2 billion to at least $4 billion per operation. Treasury Secretary Scott Bessent has said those purchases could go above the new minimum.

Treasury did not say how it would pay for the larger buys. Most traders expected more short-term bill sales, and officials have not ruled that out. Scott called the plan a “Treasury Twist” in an interview last week, meaning longer-term Treasurys would be bought while shorter-term debt could be issued.

Source: TradingView.

Treasury weighs its $950B cash account

The Treasury General Account, or TGA, is the government’s main cash account at the Federal Reserve. It already holds tax collections. Using it could let Treasury pay for part of the buybacks with cash already on hand rather than relying only on new bill issuance.

The balance is now near $950 billion, compared with the Biden administration’s stated target of about $550 billion to $600 billion. Scott built the account above that earlier range.

The officials did not say how much of the TGA might be used, whether any cash will be used at all, or when an announcement could come. They gave no sign that the money would support purchases beyond the off-the-run securities covered by last week’s plan. They did say the account is available.

Officials allegedly also rejected claims that Treasury had dropped its “regular and predictable” approach to debt sales or was gaming the market. The larger buyback plan came about two weeks after the quarterly refunding announcement, where such information would normally appear.

According to CNBC, the official auction schedule did not change. Treasury announced the plan on Aug. 19, nearly three weeks before the first operation on Sept. 9, and released the schedule for the whole quarter.

Trump’s Treasury prepares a new Iran financial offensive

The U.S. is also set to unveil new financial measures against Iran on Monday. Washington and Tehran missed a 60-day ceasefire window to reach a deal, shutting the formal truce route as the Middle East war enters its sixth month. Tehran has threatened to seize vessels that break transit rules in the Strait of Hormuz.

On X Sunday evening, he said Trump had annihilated nearly all Iranian military facilities, destroyed its military capability, and made its nuclear program inconsequential. The next step he referred to was described as an “economic D-Day”, with Scott stating how Iranians believed retaliation was certain and American sanctions were negotiable. Scott further said that:

“The Islamic Republic has drawn strength from a calculus that regards Iranian retaliation as certain and American enforcement as negotiable. Under President Trump, those who fear the danger of defying Tehran ought not to discount the cost of testing Washington. The President has created the conditions to leverage every agency, every authority and action many assumed we would never summon. Our objective is to sever every economic lifeline that sustains the tyrannical regime until Tehran stands alone.”

The new measures will add to sanctions already targeting Iran’s banking, energy, aviation and cryptocurrency sectors. The Trump administration says Iran’s economy is in sharp decline, with runaway inflation and a falling currency. The Iranian rial hit a new open-market low Sunday, with one U.S. dollar moving above 2 million rials.

Scott also wrote in a Financial Times opinion piece that countries cutting Iran’s remaining financial and commercial links could strengthen their own access to global capital and markets.

Scott said:

“Those who sever Iran’s remaining financial and commercial connectivity will reinvigorate their own. They will deepen their access to global capital, reinforce confidence in their markets and attain the standing they seek in the world economy. And any nation that serves as a financial artery of a withering regime should expect to share in its isolation. To become a sanctuary for terror is to become, in the eyes of the United States, a global pariah.”

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