Bessent's efforts in the Treasury market so far haven't worked. Here's what else he can try

• Bond yields rebounded after Bessent's interventions, with analysts calling the $4 billion+ buyback plan 'a weak form of Operation Twist' that had 'minimal impact' in such a large market
• Available options include larger/more frequent buybacks, smaller auctions of long-dated debt, changing maturity composition toward shorter-term bills, or unpredictable tactical moves to create a 'Bessent put' perception
• Credibility concerns emerged as Treasury broke its 'regular and predictable' communication strategy by announcing buyback changes two weeks after quarterly refunding plans with no prior indication of policy shifts

Summary

Key Development: Treasury Secretary Scott Bessent's initial efforts to stabilize the government bond market have largely failed, with yields rising despite intervention attempts. Bessent announced accelerated bond buybacks starting September, exceeding $4 billion, but markets remain skeptical.

Market Response: Bond yields at the long end initially fell Wednesday following the buyback announcement but quickly rebounded. Bessent's Thursday CNBC appearance had "minimal impact," according to Evercore ISI analyst Krishna Guha, who called the plan "a weak form of Operation Twist."

Remaining Options

• Larger, more frequent buybacks beyond the current $4 billion commitment
• Smaller auctions of longer-dated debt, shifting to shorter-term bills
• Change maturity composition of outstanding debt toward shorter durations
• "Bessent put" - tactical, unpredictable interventions to catch short-sellers off-guard

Underlying Challenges

• U.S. budget deficit near 6% (triple the post-WWII average until COVID)
• National debt surpassed $40 trillion
• Structural shift in Treasury buyers as central banks reduce holdings and hedge funds play bigger roles
• Competition from corporate bonds and other sovereign debt (Japan)
• Rising term premiums as investors demand higher compensation

Credibility Concerns: Jefferies economist Thomas Simons criticized the announcement's timing—coming two weeks after quarterly refunding plans—breaking Treasury's "regular and predictable" communication strategy and reducing guidance credibility.

Outlook: Bessent acknowledged having a "big toolkit" and plans to meet with OMB head Russell Vought for "fiscal consolidation" discussions. However, analysts warn these interventions may only provide temporary relief without addressing fundamental fiscal sustainability issues.