Remember this?
Via Reuters:
The Treasury said it was considering semiannual auctions of a 30-year nominal security beginning February 2006. It announced suspension of the 30-year bond in October 2001, with the last auction having taken place in August that year.
Not that surprising, really. Everyone who has refinanced their house in the last few years knows that locking in a low interest rate for 30 years is a good thing.
They'll make an announcement August 3. I think it will be affirmative. They wouldn't admit they were considering it unless it was actually going to happen.
And so they are. David Andelman of Forbes writes about it, concluding thus:
Indeed, for the bond fund manager, the arrival of the shiny new 30-year Treasury only complicates matters. The duration of these bonds inevitably introduces more uncertainty, and uncertainty breeds volatility. "The 30-year Treasury, at least right now, isn't offering fund managers dramatically more yield than the 10-year Treasury," says Scott Berry, bond fund analyst at Morningstar. "But they could be getting considerably more volatility."
That said, it's unlikely then that many fund managers or even savvy individual investors will be waiting in line at midnight for the Treasury to open the 30-year window. So will anyone be there?
Absolutely. Pension fund managers, for instance, are in love with the long-duration bonds. So much so that there are even 100-year municipal bonds issued by some far-sighted U.S. locales, while 50-year euro bonds are also in big demand. Pension managers love these long-maturity bonds because only rarely do they have to trade them. If they're on the hook for a pension booked today for a 25-year-old fireman who won't be collecting until he turns 65, well then a 30- or 50-year bond looks very nice indeed. The fund manager knows just how much his investment will be paying at every step along the way.
Might I also refer you to what Brad Setser said back in May.
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