Oct 31, 2019

The ultralong bond is back in consideration as deficits rise

Photo: Chen Mengtong/China News Service/VCG/Getty Images

The Treasury Department announced Wednesday that it was looking into releasing two new maturities — a 50-year and 20-year bond.

Why it matters: The new issues would help offset the increasing share of Treasuries that U.S. financial institutions have had to buy recently, largely as a result of decreasing foreign buyers and the Trump administration's increasing deficits.

  • Secretary Steven Mnuchin said in September that Treasury was studying whether there was enough demand for 50-year Treasury bonds.

Context: The glut of government debt has been blamed for some of the problems in the repo market and for weak auctions this year.

What's next: Per a Treasury press release...

"Treasury is considering a range of potential new products that includes a 20-year bond, an ultra-long bond such as a 50-year, and a floating rate note linked to the Secured Overnight Financing Rate."
"Overall, primary dealers viewed the potential introduction of a new 20-year bond favorably in the context of increased financing needs beginning in FY2021."

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  1. Global: Total confirmed cases as of 3 a.m. ET: 5,410,228 — Total deaths: 345,105 — Total recoveries — 2,169,005 — Map.
  2. U.S.: Total confirmed cases as of 3 a.m. ET: 1,643,499 — Total deaths: 97,722 — Total recoveries: 366,736 — Total tested: 14,163,915 — Map.
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