Treasury's Surprise Debt-Maturity Move Eases Sting of Fed Unwind
- Treasury will no longer seek to extend maturity of its debt
- Move aimed at preventing ‘yield shock’ to U.S. economy
The U.S. Treasury building in Washington
Photographer: Julia Schmalz/Bloomberg
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As the rest of Washington fixated on tax reform and a new Federal Reserve chair last week, the Treasury Department unveiled a borrowing strategy lacking fanfare but having potentially big implications for the bond market and the U.S. economy.
In a step that could limit upward pressure on long-term interest rates from bigger budget deficits and a reduced Fed balance sheet, the Treasury will break from a policy in place since 2009 and stop attempting to lengthen the maturity of the government’s debt.