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So Much For ‘Regular And Predictable’: What Treasury’s 50-, 100-Year Bond Outreach Means
On Friday, after the close, Treasury decided to go ahead and tip a new "outreach" effort aimed at "refresh[ing] its understanding of market appetite" for ultra-long issuance.
In addition to a 50-year tenor, there's some speculation about a US century bond. It was obviously not a coincidence that the news came after a week during which 30-year yields fell below 2% for the first time.
Although Steve Mnuchin said in 2017 that ultra-long obligations might “absolutely make sense”, previous outr
Or fund the unfunded tax cuts of 18, those conservative spending bills, additional tax cuts since this is the greatest economy ever, and those several trillion dollars deficits when the next recession hits. So many things, so many issuances………….,,,…,;,…
financing gap faced by Treasury in coming years is likely to be too large to address with a heavy concentration of front-end issuance. Such a policy would also imply an undesirable decline in the WAM (weighted average maturity) in response to Fed run-off and higher deficits.
The Committee discussion highlighted that it is simply not a viable strategy to accommodate the magnitude of the potential additional issuance using only front-end instruments. The Fed run-off and potentially higher deficits represent meaningful challenges that would require a sustained shift in borrowing needs to be spread across the curve.