The US Treasury expects to borrow $739 billion from July through September while paying investors to hand back some of its older bonds. The pairing looks self-defeating because both transactions involve the same issuer. However, they are on separate ledgers and solve separate problems: auctions finance the government and create liquid benchmarks, while buybacks retire selected old issues or help Treasury manage its cash balance.

Treasury’s Aug. 3 borrowing estimate assumes a $950 billion cash balance at the end of September, then projects another $628 billion of borrowing from October through December. Its August refunding statement authorized as much as $38 billion of liquidity-support purchases and $25 billion of short-dated…