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Expert: Unclear Who Will Buy 50-, 100-Year US Notes

Expert: Unclear Who Will Buy 50-, 100-Year US Notes

Treasury Secretary Steven Mnuchin said during a Bloomberg News interview Wednesday that the government is exploring the creation of a long-term 50-year or 100-year bond.

What Happened

Conversations related to the creation of a 50-year or 100-year note comes at a time when existing U.S. debt is dominating headlines. Yet the Treasury was considering the launch of ultra-long debt as early as 2009 to ease some pressure on taxpayers, according to Bloomberg. 

The long-term bonds would give pension funds "a few extra points of returns amid fallying yields," the report said. 

Layers Of Confusion

It is "not really clear" who wants to buy U.S. debt that matures in either half a century or a full century, Bloomberg's Derek Wallbank said on "Bloomberg Surveillance" Thursday.

It is also unclear why the Treasury is going public with its potential plans at this time, and Wallbank said it is a "surprise" the administration is even considering it in the first place.

The multiple layers of confusion and lack of clarity as it relates to U.S. debt extends to senior White House officials, Wallbank said.

For example, a senior official in the White House said in an interview on another TV network that the recent yield curve inversion is a sign of booming confidence in the economy.

"I don't know," he said. "Who knows this stuff? Really?"

What's Next

Mnuchin said in the Bloomberg interview that the administration would take advantage of long-term borrowing and execute on ultra-long debt, but only if "the conditions are right."

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Posted-In: Bloomberg Derek Wallbank Steven MnuchinNews Media Best of Benzinga