The U.S. Treasury Department is evaluating whether to deploy funds from its General Account, which holds approximately $1 trillion, to support its expanded bond buyback initiative, according to reporting from Treasury officials. The specific amount that could be withdrawn from the account was not disclosed by the officials.
Following the announcement of this potential funding approach, the 10-year Treasury note yield declined 4 basis points to 4.7%, while the 30-year yield retreated 4 basis points to 5.23%. The 30-year yield had reached its highest level since 2007 in the preceding week before pulling back.
The Treasury General Account serves as the federal government’s main operating account held at the Federal Reserve. The account currently maintains a balance near $950 billion, which exceeds the $550 to $600 billion target level established by the previous administration. Treasury Secretary Scott Bessent has built this surplus using existing tax revenue. Market participants had anticipated that buyback funding would come primarily through sales of new short-term bills under what Bessent termed a “Treasury Twist” strategy. However, officials indicated the General Account now represents an additional potential funding source, while not ruling out the bill-sale approach.
Treasury officials stated that a partial drawdown of the account would not create cash management difficulties in the near term, with the next debt-ceiling constraint anticipated between late winter and early spring. The General Account funding option comes following Treasury’s announcement the previous week to at least double the maximum size of its per-operation bond purchases for longer-dated securities, raising the ceiling from $2 billion to at least $4 billion for the 10-to-20-year and 20-to-30-year market segments, with operations scheduled to run from September 9 through November 4.
The Treasury reporting emerged during the Jackson Hole Symposium, with market attention focused on Federal Reserve Chair Kevin Warsh’s keynote address scheduled for later in the week. The timing coincides with elevated price pressures and a federal debt load standing at $40 trillion.
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