Economic Information Daily reported on the 13th that Wall Street is closely watching whether U.S. Treasury Secretary Bessent will announce the suspension of the issuance of the illiquid 20-year Treasury bonds in the quarterly refinancing statement on November 4. The U.S. Treasury Department had previously suspended the issuance of 30-year Treasury bonds in 2001.
The U.S. Treasury Department is facing mounting pressure on its debt issuance costs, with long-term yields rising to their highest levels since 2002. Although demand remained solid in last week's auctions of 10-year and 30-year Treasury bonds, the auction yields for both reached their highest levels since 2000. Against this backdrop, Wall Street has recently been abuzz with rumors that the Treasury may reduce or even cancel the issuance of 20-year Treasury bonds.
Deutsche Bank strategist George Saravelos said the market has already caught wind of this. Jason Williams, Citigroup's head of U.S. interest rate strategy, further advised investors to adjust their positions, as the 20-year Treasury bond could outperform the 10-year Treasury bond due to expectations of a reduction or cancellation of its issuance.
The core rationale behind whether the 20-year Treasury bond will be discontinued mirrors the decision in October 2001 to halt the issuance of the 30-year Treasury bond—namely, to reduce borrowing costs for taxpayers. That unexpected move by the Treasury at the time caused market turmoil and drew widespread criticism, and the 30-year Treasury bond was subsequently reinstated. (rc)
The U.S. Treasury Department is facing mounting pressure on its debt issuance costs, with long-term yields rising to their highest levels since 2002. Although demand remained solid in last week's auctions of 10-year and 30-year Treasury bonds, the auction yields for both reached their highest levels since 2000. Against this backdrop, Wall Street has recently been abuzz with rumors that the Treasury may reduce or even cancel the issuance of 20-year Treasury bonds.
Deutsche Bank strategist George Saravelos said the market has already caught wind of this. Jason Williams, Citigroup's head of U.S. interest rate strategy, further advised investors to adjust their positions, as the 20-year Treasury bond could outperform the 10-year Treasury bond due to expectations of a reduction or cancellation of its issuance.
The core rationale behind whether the 20-year Treasury bond will be discontinued mirrors the decision in October 2001 to halt the issuance of the 30-year Treasury bond—namely, to reduce borrowing costs for taxpayers. That unexpected move by the Treasury at the time caused market turmoil and drew widespread criticism, and the 30-year Treasury bond was subsequently reinstated. (rc)
