#TGABuybacksVsFiscalRisk
About TGABuybacksVsFiscalRisk
IMF chief Georgieva says high debt, sticky inflation and rising long yields are raising fiscal risks, while AI investment cannot erase higher borrowing costs. The US Treasury is weighing use of its $935B TGA balance for buybacks, with the cap per operation for 10- to 30-year Treasurys rising to at least $4B from Sep 9. Buybacks can improve liquidity but are not Fed QE and do not cut debt. If issuance keeps lifting term premiums, they may calm volatility without fixing the deficit-funding cost lo
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Quasi mille miliardi di dollari TGA in ingresso, per quanto tempo Besent potrà sostenere il debito pubblico USA?
Titolo originale: The Treasury Twist and the Competition for Capital
Autore originale: Sage Advisory Services
Traduzione: Peggy
Nota del traduttore: Il 19 agosto, il Dipartimento del Tesoro degli Stati Uniti ha annunciato l'espansione del supporto alla liquidità per il riacquisto di titoli di Stato a lungo termine, aumentando la dimensione massima per singola operazione di riacquisto dei titoli nominali a cedola con scadenza 10-20 anni e 20-30 anni da 2 miliardi di dollari a almeno 4 miliar
A $935B TGA sounds like a giant liquidity bazooka, but this isn't QE. Using part of Treasury's cash balance for long-bond buybacks could improve market liquidity and temporarily ease pressure on yields. It cannot erase the deficits, issuance or inflation driving long rates higher. That's the distinction that matters for BTC and gold. If buybacks lower yields sustainably, risk assets get breathing room. If they only calm volatility, the structural rate problem remains. #TreasuryEyesTGABuybacks
The crypto market may have already priced in the next wave of U.S. liquidity. Bitcoin surged from $62,000 to above $81,000, fueled by larger Treasury bond buybacks and rumors of up to $950 billion being deployed from the TGA. While this isn’t QE, the temporary liquidity boost could support bonds, lower yields, and push funds into stocks and crypto. However, liquidity could reverse once the Treasury replenishes the TGA.
#BTC80KHoldOrFold #IranSanctionsAndTalks #Anthropic30TTAM
US liquidity expectations may already be priced into crypto. BTC surged from $62K to $81K+ in a week as Treasury buybacks expanded and TGA drawdown rumors fueled another push higher.
It’s not QE, but markets may treat it as temporary easing, potentially sending liquidity toward stocks and crypto. The risk? Once the TGA is rebuilt, that liquidity boost could fade.
#BTC80KHoldOrFold #IranSanctionsAndTalks #Anthropic30TTAM
#TreasuryEyesTGABuybacks The U.S. Treasury is reportedly considering whether its Treasury General Account could help finance additional purchases of long-term government bonds. The TGA, effectively the government’s account at the Federal Reserve, contains roughly $935 billion to $950 billion. Treasury has already increased its long-duration buyback limit from $2 billion to at least $4 billion per operation, beginning September 9. The exact scale of any TGA-funded expansion remains unclear.
Using the account could temporarily improve demand for long bonds and release liquidity into the financial system. However, this would not be Federal Reserve quantitative easing, and the Treasury cannot permanently solve high yields by rearranging its cash and debt maturity profile. Persistent deficits, heavy issuance and inflation expectations will continue influencing borrowing costs. Gold and Bitcoin could benefit if the policy weakens the dollar or is interpreted as financial repression. The market should wait for confirmed size and timing before treating the entire TGA balance as available stimulus.
Treasury buybacks may improve market plumbing, but they should not be mistaken for a change in the fiscal tide. Using a $935B TGA balance while raising the cap for 10- to 30-year Treasury operations to at least $4B from Sep 9 could ease liquidity strains at the margin. It does not resemble Fed QE, reduce outstanding debt, or remove the pressure of sticky inflation and elevated long yields. My read: if heavy issuance keeps term premiums firm, buybacks can smooth volatility while leaving the underlying deficit-funding challenge intact. Not advice, just analysis.
#TGABuybacksVsFiscalRisk
Bill Nelson: "Earlier this week, Steve Liesman at CNBC broke the story that the Treasury might fund its buybacks of longer-term securities using some of the cash it has on deposit at the Federal Reserve Bank of New York (the “Treasury General Account” or “TGA”) rather than by issuing more bills. If the Treasury were to do so, however, the Fed would end up reducing its investment in bills by the same amount. The public would likely end up having to purchase the same quantity of bills at auction as they would if the Treasury funded the buybacks with increased bill issuance." @CNBC @steveliesman @bankpolicy
Steno: there's a war chest of already issued dollars parked at the Fed and the Treasury might be about to spend it.
The option on the table is funding the buybacks from the TGA. Those dollars already exist, they've just been sitting idle. Use them to buy back bonds and they flow into the banking system. An idle dollar becomes a live one. Fresh liquidity, without issuing anything new.
Steno's guess is the Treasury deploys $350 to 400 billion of it over the coming years. By his math, that's roughly what the market needs to function properly.
@AndreasSteno and @RosenvoldGeo walked through the full setup on Macro Mondays.
