Bessent's First Attempt to Calm Bond Market Fails, but 'Four Moves' Remain

U.S. Treasury Secretary Bessent took measures to calm the bond market, including expanding bond repurchases, but the effects were limited. The market criticized the scale as insufficient, and long-term bond yields rebounded. Bessent has four remaining options, but none are guaranteed to work.

The Treasury announced plans to double the scale of long-term bond repurchases starting in September, but the market criticized the scale as insufficient. According to Evercore ISI, the current policy is only a 'weakened version of Operation Twist' and is unlikely to have a lasting impact.

Bessent has four remaining options, but none are guaranteed to work. The first is to expand the scale and frequency of repurchases, the second is to reduce the scale of long-term bond issuance, the third is to adjust the debt maturity structure, and the fourth is to make sudden interventions in the market (the Bessent Put).

However, these measures are only expected to temporarily slow the rise in interest rates and are not seen as a long-term solution.