Treasury Secretary Scott Bessent's two-pronged effort to quell liquidity problems — accelerated buybacks and verbal reassurance — has met with little success. Wednesday's announcement to at least double bond buybacks starting in early September initially sent yields tumbling, but they quickly rebounded Thursday as analysts like Evercore ISI's Krishna Guha called the plan "a weak form of Operation Twist" and said the interview had "minimal impact."

With buybacks confirmed potentially exceeding $4 billion, critics argue the size is ineffective in such a large market. Bessent retains options including bigger buybacks, smaller long-dated auctions, shifting maturity composition, or invoking a "Bessent put" to catch shorts off-guard. However, Jefferies' Thomas Simons warned the rollout broke Treasury's "regular and predictable" communication strategy, reducing credibility.

Structural shifts compound the challenge: central banks shrinking balance sheets, hedge funds becoming marginal buyers, a deficit-to-GDP ratio near 6%, and national debt surpassing $40 trillion. Bessent suggested cooperation with the Federal Reserve, though Chair Kevin Warsh emphasizes market-set rates. Bessent and OMB head Russell Vought plan to discuss fiscal consolidation amid mounting deficits and political pressure for tax cuts.