I guess (like Greenspan) the government is finally acknowledging the budget surplus might not be here to stay. Kind of a head slapper that this was on the horizon, now that it is out there."We will examine if we have the flexibility to issue 30-year bonds while maintaining deep and liquid markets in our other securities and determine if nominal bond issuance is cost effective," said Timothy Bitsberger, assistant secretary for financial markets.
Treasury will announce a decision about issuing the 30-year bond on Aug. 3. If reinstituted, the bond could be sold again in February 2006. Read the report.
They probably could have picked a better day to announce this than after the FOMC misprint. While I am not a big believer that supply has any lasting impact on the level of interest rates, when they announced the end to 30-year issues the yield on the long bond fell 40 bps in 2 days.
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