The U.S. Treasury may use about $1 trillion in TGA balances to expand long-term U.S. Treasury bond repurchases

According to CNBC, two senior officials from the U.S. Treasury revealed that the Treasury may utilize a fiscal general account (TGA) close to $1 trillion to fund its recently announced expansion of the government bond purchase program. Using the TGA account will give the Treasury greater ability to influence long-term bond yields.

Last week, the U.S. Treasury unexpectedly announced that it would increase the repurchase scale of long-term "off-the-run securities" from $2 billion to at least $4 billion. U.S. Treasury Secretary Yellen stated that the scale of such operations could even exceed this new minimum level. However, the Treasury did not specify how it would fund these purchases at that time.

Most market participants previously believed that the Treasury would raise funds by increasing the issuance of short-term Treasury bills. If the TGA account is utilized, the market's perception of this plan may change.

The TGA is essentially a "checking account" that the U.S. government has with the Federal Reserve, similar to an emergency fund pool for the government. The funds in this account come from existing tax revenues.