The U.S. Department of the Treasury confirmed in its May 6 quarterly refunding statement that it plans to raise the balance in the Treasury General Account (TGA) to about $900 billion by the end of June, and to about $1 trillion by the end of July (with a $50 billion fluctuation in either direction). The Treasury explained that this level aligns with its long-term cash balance policy, mainly because large outflows of funds are expected in July.
May Quarter Refunding: Confirmed Issuance Size and Auction Schedule
According to the quarterly refunding statement released on May 6, 2026 by Brian Smith, Deputy Assistant Secretary of the U.S. Treasury, the Treasury will issue $125 billion in Treasury notes to redeem about $83.3 billion in privately held notes maturing on May 15, and expects to raise about $41.7 billion in new funds from private investors.
The issued Treasury notes include $58 billion in 3-year notes, $42 billion in 10-year notes, and $25 billion in 30-year bonds. The corresponding auctions will be held on May 11, 12, and 13, respectively, with settlement on May 15. The Treasury also confirmed that, in the May to July 2026 quarter, it will maintain the existing auction sizes for both nominal coupon notes and floating-rate notes.
Repurchase Plan and Note Issuance: Confirmed Quarterly Operational Details
The repurchase plan for the May to July 2026 quarter confirmed by the Treasury includes: buying up to $38 billion of non-active securities to support liquidity, and buying up to $25 billion of securities with maturities ranging from 1 month to 2 years for cash management.
Regarding bill issuance (Bills): the Treasury plans to increase the size of short-term benchmark Treasury bill issuance in the coming weeks, issuing short-term CMBs in late May. In June, influenced by the expected mid-month corporate income tax payments, it plans to slightly reduce auction size. In July, it plans to gradually increase auction sizes for Treasury bills across different maturities. In addition, the settlement date for the reissuance auction of 20-year Treasury notes has been adjusted starting June 16, 2026 to the Friday of the auction week, rather than the end-of-month settlement originally used.
Frequently Asked Questions
How would supplementing the TGA to $1 trillion affect market liquidity?
The TGA is the cash account held by the Treasury at the Federal Reserve. When the Treasury issues Treasury securities and deposits the proceeds into the TGA, these funds move out of commercial banks or money market funds, directly reducing the liquidity available in the financial system. In recent years, the market has mainly cushioned the liquidity-draining effect of TGA funding via the balance of the Federal Reserve’s reverse repo facility (RRP), which previously reached more than $2.5 trillion; but the RRP balance has now fallen to less than $100 billion, greatly shrinking the cushion, meaning that future TGA funding is more likely to directly consume commercial bank reserves.
Why did the Treasury set a $1 trillion TGA target by the end of July?
Per the Treasury’s quarterly refunding statement, the $1 trillion target reflects the Treasury’s long-term cash balance policy. The main reason is that large outflows of funds are expected in July (including Treasury interest payments and other seasonal peaks in spending). Maintaining sufficient cash reserves is standard practice for the Treasury to meet unexpected liquidity needs. The target range is $1 trillion with a fluctuation of $50 billion up or down, reflecting reasonable execution flexibility.
What transmission impact does this refunding statement have on crypto assets like Bitcoin?
TGA funding exerts pressure on crypto assets through the following channels: TGA funding withdraws market liquidity → bank reserves contract → overall risk appetite declines → risk assets, including Bitcoin, face selling/outflow pressure. This transmission mechanism is less effective when the RRP cushion balance is sufficiently high; but in the current environment where the RRP balance is already below $100 billion, the liquidity tightening effect may be more direct.
