Yield Curve Suggests Sales of Ultra-Long U.S. Bonds Are Unlikely
- Positive convexity enticement not seen as enough for investors
- Each basis point increase costs more than for 30-year debt
A woman walks past a statue of Albert Gallatin, the 4th Secretary of the U.S. Treasury, while entering the Treasury building in Washington, D.C.
Photographer: Brendan Smialowski/BloombergThis article is for subscribers only.
The likely absence of a dip in the tail-end of the yield curve helps tell you why the U.S. Treasury probably won’t be selling ultra-long bonds.
While Steven Mnuchin, President-elect Donald Trump’s pick for Treasury Secretary, said he’d “take a look at everything” in response to a question about 50- and 100-year bonds, an analysis of the projected gap between yields on 30-year bonds and the longer securities signals investors won’t pay enough for the debt for it to make sense for the government.