20yr Bond Comeback: Treasury Uses 20/20 Vision Back To The 1980s?
(5 min read)
After much consultation, the US Treasury will be re-adding the 20-year bond back into its suite of marketable debt products in an effort to expand its bond offerings. This is a timely launch in our view as it comes during an era where the US government is poised to run $1 trillion annual fiscal deficits for as far as the eye can see. We explore the significance of this new bond on the curve, ‘the signaling effect’, and macro/Fed implications.
Why Settle on a 20-year?
After gathering feedback from a broad array of bond market participants, the Treasury will be adding back a 20-year nominal coupon bond. The last 20-year Treasury bond was issued during the mid-1980s. This is also the latest new long nominal bond since the 2006 re-launch of the 30-year.
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