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Mnuchin Says Ultra-Long Bond Program Wouldn't Be a One-Off

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(Bloomberg) — Treasury Secretary Steven Mnuchin said the government only intends to introduce ultra-long bonds if there’s an audience for regular issuances of the debt.

“We’re reaching out to the borrowing community and investors to see what the demand is,” Mnuchin said in an interview on Bloomberg Television on Tuesday at an investment conference near Washington. “What we don’t want to do is to create a program that is a completely one-off program. We want to see if it would be an important part of our borrowing capabilities.”

(Related: U.S. Life Insurers May Not Want 50-Year Treasury Bonds)

Mnuchin in May said that ultra-long bonds “ absolutely make sense,” and formed an internal working group to study maturities of 50-and 100-year debt.

The work will be assessed along with feedback from the Treasury Borrowing Advisory Committee, whose members include executives from JPMorgan Chase & Co., Bank of America Corp., Citadel LLC, and Goldman Sachs. It also includes representatives from affiliates of three major life insurance and annuity providers: Voya Financial Inc., Prudential Financial Inc., and Allianz A.G.

The group has voiced concern about demand for ultra-long debt, and instead suggested boosting sales of debt with maturities of 30 years or less.

While a strong dollar has some negative impacts for U.S. exporters, it’s a barometer on the confidence of investors in the economy under President Donald Trump, said Mnuchin.

“There is obviously certainly negative aspects of a strong dollar as it relates to our exports,” said Mnuchin. “But on the other hand a strong dollar is a vote of confidence in the U.S. economy and the Trump administration similarly to what is going on with the stock market.”

The administration hasn’t decided whether Fed Chair Janet Yellen will be re-appointed for a second term in February or someone new will take over the position. Mnuchin said he’s working with White House economic adviser Gary Cohn to make recommendations to Trump.

— Read Mnuchin Super-Long Chatter Sends Treasury Yield Curve Steeper on ThinkAdvisor.


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