Well, that's one way to get long-term interest rates up.
U.S. Treasuries maturing in five years or more fell after the government said it is considering resuming sales of 30-year bonds for the first time since 2001.As I type the 10-year is up to 4.23%, rising over 1% today. Now this is still nothing compared to where it was in late March (~4.6%), but one has to wonder if the ultra-low ten-year yields can last with the 30-year on the way. And more importantly, what will this do to mortgage rates which tend to move in tandem with the 10-year? After all, it was late March when the 30-year FRM topped 6.0% for the first time since July 2004.
The prospect of additional supply of longer-maturity debt pushed the so-called long bond to its biggest decline in almost two months. As recently as last month Treasury officials said they had no plans to bring back the security.
``It definitely caught the market off guard,'' said Joseph Shatz, a government bond strategist at Merrill Lynch & Co. in New York and one of the 22 primary dealers of U.S government securities that are obligated to bid at the Treasury's auctions. ``I don't think anybody was prepared'' for today's announcement.
Keep your eyes peeled. The Bush administration just might flood global debt markets yet.