Starting September 9 and running through November 4, the Treasury will conduct liquidity-support buybacks with a maximum operation size of at least $4 billion. That’s double the previous cap of $2 billion per operation. Bessent hinted the actual amounts could climb even higher.
How the plumbing works
The mechanics are straightforward in concept, if not in scale. The Treasury buys back older, less liquid long-term bonds using cash from the Treasury General Account, the government’s main checking account at the Federal Reserve. To replenish that account, it issues additional short-term bills.
The authority for these buybacks comes from 31 U.S.C. Section 3111, which permits both liquidity-support and cash-management buyback operations. The liquidity-support variety, which this program falls under, is specifically designed to improve trading conditions in the Treasury market by removing older, harder-to-trade securities from circulation.
Scale versus skepticism
