US Treasury Secretary Scott Bessent asserted on Thursday that he possesses a "large toolbox" of policy options to alleviate pressures in the Treasury market. While he did not specify particular instruments, several avenues are available: reducing the duration of government-held debt, expanding the Treasury buyback program, and adjusting the maturity structure of the department's portfolio. Despite the Secretary's reassuring remarks, Treasury yields still climbed higher on Thursday.

On August 20, 2026, in Washington, US Treasury Secretary Scott Bessent spoke to the media outside the White House. Secretary Bessent insisted on Thursday that he has multiple policy tools at his disposal to resolve liquidity challenges in the Treasury market and calm market turbulence. While this statement is not inaccurate, the two measures he has introduced so far—accelerating Treasury buybacks supplemented by verbal guidance aimed at aligning market sentiment with policy logic—have yielded minimal results.

On Wednesday, the Treasury Department announced it would at least double the scale of its Treasury buybacks starting in early September. When the news broke, investors interpreted it as a safety net for long-dated bonds, causing yields to drop sharply. However, constrained by multiple bearish factors affecting US Treasuries, long-end yields rebounded once again, and market professionals have voiced skepticism about the policy's effectiveness.

Following that, on Thursday, Bessent appeared in an interview, stating that the intervention's purpose was solely to provide market liquidity, not to manipulate the yield curve. Yields initially dipped slightly but soon rebounded again. Market participants criticized the manner in which the previous day's announcement was released, with some analysts noting that the interview "did little to ease market pressure."

Even so, Bessent still has several backup policies that could be implemented in the future. "We have a large toolbox," the Treasury Secretary said, "some tools are used to send policy signals to the market, indicating that current yields do not reflect economic fundamentals." Yet market concerns are intensifying; critics point out that even if Bessent confirms the buyback scale can exceed $4 billion, its effectiveness remains limited given the sheer size of the bond market.

Evercore ISI analyst Krishna Guha described the plan as a weakened version of Operation Twist—a Federal Reserve tool that adjusts the duration structure by swapping short-term and long-term Treasuries. Guha stated: "The measure alone can hardly produce lasting effects; if the market interprets it as the Treasury worrying about its inability to issue long-term debt at acceptable costs, the policy could even backfire." He added that Bessent's interview had "minimal impact on the bond market."

Bessent also holds several other options, though none guarantee success and each carries inherent risks:

Expanding buyback scale and frequency: Bessent could claim that the initial round of increased buybacks exceeded expectations, prompting the Treasury to further intensify its buyback efforts.

Reducing long-term auction sizes: The Treasury could directly cut long-term debt issuance and shift borrowing toward short-term bills. However, Bessent was highly critical of his predecessor Janet Yellen when she adopted a similar approach.

Adjusting the duration structure of existing debt: This is essentially a more aggressive version of reducing long-term auctions. It requires market investors to absorb shorter-duration, lower-yield bonds, carrying higher risks. Guha, head of economics and central bank strategy at Evercore, wrote in a client note: "Global investors are well aware that sovereign nations in fiscal distress often turn to short-term issuance. We believe the US is different from other countries, but that difference has its limits."

Deploying the "Bessent put": The market has already used this term to refer to the Treasury's series of interventions. The Secretary could employ unpredictable combinations of tools to catch bearish Treasury investors off guard. Guha wrote: "This set of tools is better suited for tactical guerrilla-style operations—catching shorts by surprise, inflicting losses, creating two-way risk expectations, slowing down fundamental-driven yield increases, preventing overshooting, and smoothing market movements. But the problem is that these measures leave almost no lasting impact on yield levels months down the line."

Government credibility under scrutiny. Regardless of which path Bessent chooses—including doing nothing and letting the market clear on its own—he will face a credibility challenge, as the market grows increasingly skeptical and wary of the multiple challenges facing US Treasuries.

Thomas Simons, chief US economist at Jefferies, criticized that the announcement process for this buyback itself was irregular. He noted that the Treasury had released its quarterly refunding statement just two weeks prior, with no indication of plans to modify the buyback mechanism. Simons wrote: "This move breaks the Treasury's long-standing principle of 'regular and predictable' communication. Nearly all policy changes and forward guidance are normally announced through the quarterly refunding statement. To put it bluntly, the communication strategy has been compromised, damaging the overall credibility of official guidance." He added: "The headline wording of the press release was sloppy, leaving an impression of hasty decision-making."

Bessent now faces a dilemma: efforts to压低 long-end yields may instead lead investors to demand higher risk premiums. Multiple factors are at play. As Bessent noted in Thursday's interview, not all factors pushing yields higher are fundamental. These include: intensifying competition for capital from corporate bond issuance; rising attractiveness of other sovereign bond yields in countries like Japan; oil prices fueling inflation concerns; and investors demanding ever-higher term premiums.

To address these issues, Bessent could seek coordination with the Federal Reserve. Although Fed Chair Kevin Warsh has emphasized that interest rate levels should be left to market forces, Bessent stated on Thursday that the Treasury and the Fed would "work together" during complex conditions in the Treasury market, with the Fed simultaneously managing its own Treasury holdings. The US and global Treasury markets are undergoing a paradigm shift, with various variables intersecting and resonating.

Atish Sheth, chief credit officer at Moody's Ratings, said: "The buyer structure of US Treasuries has fundamentally changed. As central banks shrink their balance sheets, traditional long-duration bond buyers' capacity has peaked, and new buyers such as leveraged hedge funds employing relative value strategies are playing an increasingly important role."

Beyond that, the US fiscal situation is dire—the fiscal deficit stands at nearly 6% of GDP, roughly three times the pre-COVID average since World War II—and government debt has just surpassed $40 trillion, further amplifying fiscal pressure. With President Trump focused on tax cuts and Congress showing little appetite for spending restraint, fiscal problems are likely to worsen. In response, Bessent said he would soon meet with Russell Vought, director of the Office of Management and Budget, to discuss fiscal consolidation—commonly understood as deficit reduction measures.

Joanne Bianco, senior investment strategist at BondBloxx, stated: "Multiple contradictions are stacking up: fiscal deficits, borrowing needs, inflation expectations, uncertainty around Fed policy, and whether the US can continue large-scale Treasury issuance at reasonable rates. The market broadly believes that such massive issuance warrants a higher risk premium."

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