From the minutes of the Treasury Borrowing Advisory Committee meeting yesterday
"The Committee commented on the demand for ultra-long debt, noting that the regular and predictable issuance policy should remain the central consideration to minimize Treasury's funding cost over time. 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 Committee recommended that further work be done to study these demand dynamics to get a better sense of where an ultra-long bond might price, which could be above or below the longest maturity debt issuance based on the pricing of domestic ultra-long derivatives, ultra-long bonds abroad, and theoretical models.
The Committee suggested that other ways that Treasury might tap potential demand from long-duration investors. To that end, the Committee recommended that Treasury consider issuing a zero coupon 50-year bond, and coupon maturities between 10- and 30-years, preferably the reintroduction of the 20-year. Finally, the Committee recommended against issuing a 100-year bond due to limited pension or insurance cash flows beyond 50-years and the preferable attributes of stripped 30-year bonds to meet a similar duration as a 100-year coupon bond."
US 30-year yields has dropped and the curve flattened on the headlines. USD/JPY also touched the highs of the day.
