US Treasury is considering using its Treasury General Account (TGA) to help finance its recently announced purchases of longer-dated Treasury bonds.
Markets have assumed the Treasury would fund the bond-buying program by issuing more short-term bills as a “Treasury Twist”.
TGA is nearly $1 trillion & is the government’s cash account at the Federal Reserve
Via CNBC
This would mean Treasury’s ability to influence long-term yields rises as they do not require new debt issuance likely meaningfully lower yields. Since the TGA balance is well above the levels maintained under the previous administration, the Treasury has room to draw it down without creating immediate funding risks.
Supportive for gold, bitcoin and commodity currencies in particular.
CNBC reported on Monday, citing two senior Treasury officials.
Since the Treasury announced that it would double the size of off-the-run securities on the long end to at least $4B from $2B, the price of bonds has receded from an initial boost. That was partly due to market skepticism that the Treasury’s resources for the operation are too limited. Using the General Account could instill some confidence that the Treasury’s purchases will be large enough to be effective.
The Treasury officials would not indicate how much, if any, of the TGA would be used for the program or when an announcement would be made, CNBC reported
The officials said no change has been made to the official auction schedule. The first operation for the larger long-dated debt purchases will occur on Sept. 9.