TBAC Slams Ultra-Long Treasury Idea, Sees No “Strong Or Sustainable” Demand; Yields Slide

With Bloomberg recently writing articles such as “Mnuchin to Wall Street: U. S. Is Serious About Ultra-Long Bonds“, “Mnuchin Says Ultra-Long U. S. Bonds Can Absolutely Make Sense” and “Wall Street Sees Treasury Paying Up for Ultra-Long Bond Issuance“, there was a tangible buildup of confusion and excitement that the US Treasury under Steven Mnuchin may follow in Europe’s footsteps and announced 50, if not 100 year Treasurys in the near future. As such, today’s quarterly refunding announcement by the Treasury Borrowing Advisory Committee – which met yesterday at the Hay Adams Hotel at 9:00 a.m. – was keenly watched to see whether Wall Street would agree or endorse the Mnuchin trial balloon.
It did not.
In fact, in the minutes released as part of the May 2 meeting, the TBAC was vocally against launching “Ultra-longs” at this moment saying “while an ultra-long is most likely to be demanded by those with longer-dated liabilities, the Committee does not see evidence of strong or sustainable demand for maturities beyond 30-years.”
The TBAC highlights the change in US TSY issuance patterns over the past three and a half decades, and notes that since 1980, the Treasury has made minimal changes to its issuance patterns: Introduced 2 new products (TIPS and FRNs); Permanently canceled 2 products (4y and 20y); Canceled and subsequently re-introduced 3 products (3y, 7y and 30y).

This post was published at Zero Hedge on May 3, 2017.