(Bloomberg) — Treasury Secretary Steven Mnuchin whet the appetites of investors who long for a super-long bond, steepening the U.S. yield curve as duration-starved speculators bet the idea he first floated last year isn’t dead.
Issuance of 50-or 100-year Treasury bonds is worth a serious look with interest rates likely to stay low for a long period of time, though he wasn’t ready to announce anything concrete on the matter, the recently confirmed Mnuchin said during an interview on CNBC.
The difference between yields on five-and 30-year Treasuries increased to its widest level of the day shortly after the remarks.
While some liability-driven investors like insurance and pension funds would applaud such an ultra-long issue, the move would not be without its critics. Orcam Financial Group L.L.C.’s Cullen Roche, for example, has argued such a move would likely raise interest expenses, and that the Treasury has already extended the average maturity of its debt significantly in response to the enduring low-rate environment.
Many analysts have deemed an ultra-long issuance to be a longshot despite Mnuchin’s previous comments to “take a look at everything” when it comes to the maturity schedule. The 30-year bond is the longest-maturity Treasury security.
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