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The Treasury Is Unlikely To Issue Ultra Long Term Bonds Regularly.

2017/2/26 16:30:00 39

UsUltra Long Term Treasury BondsEconomic Policy

The new US Treasury Secretary, said in an interview that he was not yet ready to formally announce 50 and 100 year treasury bonds, but has asked for an assessment.

Nouchine thinks this is a matter worthy of serious consideration.

At present, the US government issued bonds for the longest period of 30 years. If longer term US bonds are issued, it may mean a big change in the US bond market.

It is worth noting that some other countries, such as Canada and France, have issued 100 years' treasury bonds.

The idea is believed to have been put forward by Trump himself in an interview last May, implying that the US government has been undertaking more debt refinancing to lock in the current situation.

Low interest rate

But Trump also suggested that the US government should directly ignore the idea of huge debts and negotiate better agreements with creditors.

The industry believes that the proposal of Nu Chin's 50 and 100 year US debt is not denial of the existing US debt. The average maturity of US bonds is 5 years, 3 months, and about 1 trillion of the US debt will expire after 2027.

In January 2017, the average annual interest rate paid by the US government was 2%, down sharply from 4.9% in 2007.

It is widely expected that interest rates will rise, which means that the cost of debt repayment will rise.

In 2016, the cost of net interest paid by the US government was as high as $233 billion, and it is expected to increase to $787 billion by 2026. The US Treasury bond yield in the 10 year period is expected to rise from 2.39% to 4%.

Analysts believe that the longer term issue.

bond

It will lock in the current low interest rates in the next 50-100 years.

Homeowners, state and local governments benefit from the current low interest rate environment.

The industry believes that the Treasury can extend the average maturity of debt by issuing more long-term bonds.

However, when the US Treasury department decides to adjust the average maturity of its bonds, it will take the response of the bond market as the criterion to maintain the liquidity and order of the bond market and maintain a lower borrowing cost for taxpayers.

Analysts believe that bond market demand for long-term bonds is increasing, and the US Treasury should issue more 30 -, 50 -, and 100 - year bonds to meet demand.

Most of the investors who buy long-term treasury bonds are pension and insurance companies.

But insiders believe that the US Treasury is unlikely to issue regularly.

Ultra long term treasury bonds

Although the US economy has been recovering continuously since the outbreak of the financial crisis in 2008, the negative impact of this financial disaster on the global economic development continues to this day.

Many international organizations and banks have published a number of articles to analyze the causes of financial crisis, which are weakening the responsibility of the Federal Reserve in this financial disaster.

Now, President Trump has just taken office. The joint action appears to be a preview of the possible conflict between the Federal Reserve and the US government in the future.

In this contest, who can win the Federal Reserve and Trump?

Most of the institutions that support globalization believe that Trump inherited a thriving US economy and that the economic recovery was due to the Obama administration.

But this view is biased, because many basic indicators of economic development have declined since the financial crisis in 2008, even though the Fed has been printing large amounts of money since then.

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