Why isn't the government selling 50 or 100 year bonds?

[Tomconroy]

I saw this proposed in Barron's some years ago. Why wouldn't the Treasury Dept. lock in low interest borrowing for a very long time? Is there a case for not doing this?
Just wondering.

[PoliticAverse]

1. Should the U.S. roll out a 50-year Treasury bond?

https://www.marketwatch.com/story/should-the-us-roll-out-a-50-year-treasury-bond-2016-12-13

Although you can lock in lower rates for the long term, you have to pay higher interest than you would if you issue a 30-year or 10-year bond.

[Tomconroy]

2. I guess it depends on whether you think interest rates

are ever going to go up substantially.
Thanks.

[PoliticAverse]

3. Back in 1981 the 30-year bond hit 15%. People who locked that in got an incredible deal...

30-years of great income virtually risk (and local-tax) free. Now it is about 2%.

https://www.macrotrends.net/2521/30-year-treasury-bond-rate-yield-chart

Right now the difference in interest rates between the 30-year and 10-year is 0.38%. On $ 1 trillion in debt that's $ 3.8 billion/year.

https://ycharts.com/indicators/30_year_treasury_rate_less_10_year_treasury_rate

Now the yearly US budget deficit is about $ 2.5 trillion/year.

So if you think interest rates are going to stay the same you can save $ 9.5 billion/year just by selling 10-year bonds instead of 30-year.

[Ferrets are Cool]

4. I bought a bunch of thise in the early 80 but can't find them.

And they want me to give them specific numbers before they will replace them. HELL, if I had those numbers, they wouldn't be lost.

[PoliticAverse]

5. It could be worse...

Man who accidentally threw out a bitcoin fortune offers $70 million for permission to dig it up
https://www.cnn.com/2021/01/15/uk/bitcoin-trash-landfill-gbr-scli-intl/index.html

[progree]

6. The average maturity of our held interest-bearing marketable debt is 5.2 years

Federal Debt (Word document) - Obtained from:
. . https://www.fiscal.treasury.gov/fsreports/rpt/treasBulletin/treasBulletin_home.htm
. . Click on Current Issue
. . Click on Federal Debt ==> https://www.fiscal.treasury.gov/files/reports-statements/treasury-bulletin/b2021-3fd.doc

In June 2021, 71.1% of the $16.550 Trillion in privately held interest-bearing marketable debt has a maturity of less that 5 years, and 88.2% has a maturity of less than 10 years. The average maturity was 62 months (5.2 years).

So we're sure not taking advantage of historically near-record-low long-term interest rates to lock in these rates for decades.

If interest rates begin a sustained rise, the interest paid on the federal debt will rise rather quickly. Those interest payments come out of tax revenue, the remainder goes to programs and the war machine.

[Tomconroy]

7. I guess that's what I had in mind. If you were around in the

Late 70s to early 80s you wonder if low rates will last for the next 50 years or more.
Who knows?

[progree]

8. "If you were around in the Late 70s to early 80s" - I was, LOL, as a young adult

"Who knows?"

Yeah, I sure have guessed (wrongly) many many times all these many long decades that inflation and interest rates would turn up, but other than short bumps up like for 2 years or so, its been a steady decline of both. For many long decades.

[Tomconroy]

9. You're time may have come.

[progree]

10. It could be. I have some intermediate term bond funds like VICSX that is sinking

on a total return basis.

[Tomconroy]

11. My wife loves bonds. I've usually invested in stock funds.

It's worked for me. But you always worry.

[progree]

12. I'm 56% equities, 44% in fixed income the last time I figured it out in July

almost certainly a higher equity to fixed income ratio now with S&P 500 rising since then (it was 4323 then, and 4705 now), while bond funds have sunk.