us treasury rekindles interest in rare century bond
Last Updated : GMT 06:49:16
Arab Today, arab today
Arab Today, arab today
Last Updated : GMT 06:49:16
Arab Today, arab today

US Treasury rekindles interest in rare century bond

Arab Today, arab today

Arab Today, arab today US Treasury rekindles interest in rare century bond

Treasury Secretary Steven Mnuchin
Washington - Arab Today

The US has rekindled interest in ultra long-term debt, including possibly a rare century bond, to lock in the current very low borrowing rates.
“I think it is something that we should seriously look at,” US Treasury Secretary Steven Mnuchin said on Thursday.
He said he already has talked to Treasury staff about the possibility, and will discuss the idea with investors and market participants to gauge interest.
This would represent a historic shift in the $14 trillion Treasury debt market, as the longest maturity bond currently is 30 years.
Many countries have 50-year debt, like Italy, France, Spain, Great Britain and Canada, while Mexico, Ireland and Belgium have issued 100-year bonds.
The Treasury under former President Barack Obama considered the idea of taking advantage of the historically low interest rates to issue the ultra long-term debt, but never pulled the trigger, largely due to political considerations, economists said.
The idea “has come up on occasion but has not got a great deal of sponsorship in Washington,” said Jim Vogel, vice president of FTN Financial.
“Washington policymakers prefer to give the impression that they will be retiring debt” rather than creating new instruments to borrow.
Diane Swonk of DS Economics said the long maturities could give the wrong signal.
“It is something you do when you usually issue a lot of debt,” she told NPR radio. “Are we talking about a government that wants to signal it is going to go into a lot more debt from record high debt levels?”
On its face, it makes sense for the government to borrow over the long term at lower cost, before the Federal Reserve raises the benchmark lending rate, as it has signaled it expects to do very soon.
These new bonds “should bring some savings” in debt service costs, Vogel said, and would allow for more borrowing without putting upward pressure on the yields of other popular bonds at the 30-, 10- or five-year maturities.
Still, it would be a delicate balancing act to introduce these new debt instruments, which must be “large enough to create liquidity but not so large that if it does not work or if it falls out of favor that it will become an albatross that they have to shut down,” he said.
But other economists question whether there would be sufficient interest in buying debt of 50 or 100 years, which would be more vulnerable to inflation. While rising prices are hardly a concern in the US economy currently, there have been bouts of high inflation in the not too distant past.
Laurence Kotlikoff, economist and professor at Boston University, said: “They have to be inflation indexed. That is pretty critical otherwise you take a big bet on what inflation is going to be for the next 50 or 100 years.”
Great Britain has issued long-term securities linked to inflation and the US Treasury offers inflation-indexed five-, 10- and 30-year bonds, which Vogel said seem sufficient for the market demand.
But Kotlikoff cautions that if inflation were to follow the same path as in the last 100 years, prices will rise 200 percent, which means that a dollar invested will be worth half a penny in a century.

Source: Arab News

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

us treasury rekindles interest in rare century bond us treasury rekindles interest in rare century bond

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

us treasury rekindles interest in rare century bond us treasury rekindles interest in rare century bond

 



GMT 21:16 2016 Monday ,27 June

Zaki Badr discusses cleaning problem in Giza

GMT 21:46 2017 Saturday ,14 January

Turkey arrests 60 businessmen for alleged Gulen ties

GMT 22:38 2017 Friday ,24 March

Abbas meets with Merkel in Berlin

GMT 09:02 2017 Monday ,27 March

Tunisian Premier Concludes Visit to Sudan

GMT 15:54 2017 Friday ,01 September

Attorney General Directs Prosecutors to inspect Prison

GMT 09:22 2017 Sunday ,31 December

HM King condoles with Afghanistan President

GMT 10:12 2016 Wednesday ,06 April

Strong dollar, mild weather shrink H&M profits

GMT 17:03 2016 Saturday ,24 December

7 police killed in attacks in Afghansitan

GMT 13:51 2017 Friday ,17 March

Israel denies Syria shot down a warplane

GMT 04:08 2017 Thursday ,05 January

Carbon tax can fund clean energy transition

GMT 19:27 2016 Wednesday ,14 September

Alstom to go ahead with plans to shut down Belfort plant

GMT 01:44 2017 Friday ,15 December

Mennat-Allah underlines importance of landscapes

GMT 04:57 2017 Thursday ,14 December

Trump tells NASA to send Americans to Moon

GMT 21:43 2017 Wednesday ,11 October

Qabil discusses with Swiss delegation improving power

GMT 21:06 2017 Sunday ,17 September

OIC condemns suicide attack in Kabul

GMT 08:27 2017 Thursday ,27 April

Nokia reports another loss as networks sag

GMT 19:41 2017 Monday ,06 February

Elina Svitolina Claims Taiwan Open Title

GMT 09:39 2017 Friday ,03 February

Former Brazilian president Lula's wife dies of stroke
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday