U.S. Treasury launches 20-year bond; increases offering sizes amid record borrowing

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Source: reuters

WASHINGTON (Reuters) - The U.S. Treasury Department said on Wednesday it will launch a long-planned 20-year bond and increase securities auction sizes across a range of maturities to raise cash to meet record government borrowing needs caused by the novel coronavirus outbreak. Treasury also made clear it intends to try and move away from its current focus on Treasury bills that have helped raise urgent funds over the past six weeks in favor of spreading debt over a longer maturity structure over the coming quarters.

That said, Treasury noted it would continue to fill some of its financing needs with regular issues of cash management bills. The department has issued more than 30 cash management bills since mid-March, compared with two in February. “While the initial increases in financing related to the COVID-19 outbreak response were focused on Treasury bills, Treasury expects to begin to shift financing from bills to longer-dated tenors over the coming quarters,” Brian Smith, Treasury’s assistant secretary for federal finance, said in a statement.

“In light of the substantial increase in borrowing needs, Treasury plans to increase its long-term issuance as a prudent means of managing its maturity profile and limiting potential future issuance volatility,” he added.

Following the announcement, yields on the U.S. 30-year bond rose to their highest level since April 14 and yields on the 10-year note also climbed.



Read more: http://www.reuters.com/article/us-usa-treasury-refunding-idUSKBN22I1T3?utm_source=34553&utm_medium=partner

[Grins]

1. I'm waiting for the day when Treasury...

... goes hat-in-hand to China to sell T-bills and bonds and the Chinese say, “Ummmm, no. Maybe next quarter.”

Cuz’ that will be the day...!

[roamer65]

3. The Chinese have scaled back their buying.

Most of these bonds will be bought up via quantitative easing by the Fed.

[Roy Rolling]

2. It's Baked In

Higher interest rates as inflation is ignited by the Fed printing money to cover the deficit.

And collapsing asset prices because they are collateral for non-performing loans from the economic disruption.

Republicans, nefariously, have exploited Coronavirus bills to stuff them with corporate pork, on top of unaffordable tax cuts. So when there’s a Democratic President they’ll be screaming for fiscal austerity to control spending.

[roamer65]

4. The Fed will keep rates artificially low and let inflation rage.

If interest rates go too high, the interest payments will push the federal government into insolvency.