Talk of US 50-Year US Bonds

Introducing a US 50-year bond makes perfect sense. There is an enormous debt to fund and it would be wise to borrow and extend duration while it's cheap.

The problem is that issuing more longer-term debt now would run counter to the Fed's “Operation Twist” which would aim to lower long-term borrowing costs. Of course, the Fed will be trying to lower costs in the 10-20 year range so maybe the plans could co-exist.

My gut reaction to longer US borrowing is negative for two reasons: 1) It makes the US look even more like Japan, which has a 100-year bond, interest rates at zero and moribund growth. 2) It gives the US another reason/way to borrow, spend and increase the deficit – something that only will boost commodities and precious metals.

Originally posted at Forex Live.