Halister News

(Bloomberg) -- TBAC may not discuss ultra-long UST until May because of the time needed for the Treasury Secretary nominee to be confirmed, get settled into the new role and appoint the people involved in the decision, RBS strategist Blake Gwinn says in note.

• Treasury has also been stressing need to increase bill supply, while “pulling back on the WAM extension rhetoric”
• “Workable option” may be zero-coupon, reverse inquiry 50Y issue, though probably unlikely Treasury moves in this direction in the near future
• TBAC had discussed 50Y bond in Aug. 2014 and Feb. 2011, though got “hung up” on several issues:
  • Method of issuance, because a traditional Dutch auction may not work; secondary market liquidity, since it would likely be a “buy-and-hold investor base”; and STRIPS, because duration of coupon securities “tapers off rapidly” outside of 30yrs
  • A 50Y security may not add much duration over the 30Y, though would have “significantly less liquidity”