Bessent stops short of new bond measures amid report US Treasury may tap cash pile for buybacks

US Treasury Secretary Scott Bessent has not announced any changes to the department's bond management strategies, despite reports that the department may tap its cash reserves for bond buybacks, according to a source. Bessent refrained from signaling any revamp of US debt management on Monday, noting that the department has not yet initiated any bond buybacks.

The Treasury launched an expanded buyback program on August 19 following high yields on longer-dated maturities, but Bessent affirmed that the department would continue with its regular program of bond sales. He did not rule out reducing auction sizes for bonds, but indicated no changes ahead of the next quarterly refunding announcement in November.

CNBC reported that the Treasury could use the Treasury General Account, or TGA, for buybacks, citing two senior departmental officials. The TGA balance stood at $935 billion as of August 20. The US Treasury has historically maintained a significant balance in the TGA to provide a cushion against expected government outlays. Some market participants believe the department might use any surplus cash for repurchase agreements, but such a move has been dismissed as unlikely.

Morgan Stanley analysts estimate that the Treasury may have $80 billion to $200 billion in "excess" cash to fund bigger buybacks. The sudden announcement of increased buybacks could erode the Treasury's "regular and predictable" approach to managing debt, raising concerns about investor demand for Treasuries and potential inflation risks.