Treasury Secretary Scott Bessent said Thursday he has a "big toolkit" to address liquidity pressures in the government bond market, but Treasury yields moved higher despite his assurances. Options include reducing the duration of the government’s holdings, expanding the bond buyback program and changing the maturity composition of the Treasury portfolio. The Treasury said Wednesday that it would at least double buybacks starting in early September, briefly sending longer-term yields lower. Bessent said the intervention was intended to improve market liquidity rather than control the yield curve, but the effort had little apparent impact. The buybacks could exceed $4 billion, a scale Evercore ISI analyst Krishna Guha called a "weak form of Operation Twist," in which longer-term securities are exchanged for short-term bills. Guha said the measure could have little lasting effect or even backfire by signaling concern about the government’s ability to finance longer-term debt at acceptable costs. Other pressures include corporate bond issuance, attractive sovereign yields in countries including Japan, oil-linked inflation concerns and rising term premiums (extra yield investors demand to hold longer-term debt). Bessent suggested the Treasury and Federal Reserve could work together, although Fed Chairman Kevin Warsh has emphasized allowing markets to set interest rates. Moody’s Ratings Chief Credit Officer Atsi Sheth said the investor base for U.S. government debt is shifting as central banks reduce their balance sheets and traditional duration buyers approach their capacity limits. The United States also faces a deficit-to-GDP ratio of nearly 6%, about triple its average from the end of World War II through the period before the Covid pandemic, while national debt has surpassed $40 trillion. Bessent said he and Russell Vought, head of the Office of Management and Budget, would soon discuss fiscal consolidation, or efforts to reduce budget deficits. Analysts warned that attempts to suppress longer-term yields could instead undermine Treasury credibility and cause investors to demand greater compensation.