Halister News

(Bloomberg) -- If Treasury intends to reintroduce a 20Y bond, the closest comparison may be 2005-2006, when it revived the 30Y security, JPMorgan strategists led by Jay Barry said in May 3 note.

• Treasury discussed the 30Y reintroduction at May 2005 refunding, then auctioned the security in February 2006
• If Treasury decides to move forward with a 20Y, it may not occur before February or May 2018
• TBAC’s recommendation for a 20Y “makes intuitive sense and is easier to implement,” as Treasury has auctioned 20Y securities in the past, before discontinuing the product in 1986
• There’s already “robust hedging alternatives” for primary dealers and end users currently exist in the sector
  • CTD bond for US futures is 5% May-2037s, an original- issue 30-year with 20yrs to maturity; also, 20Y swaps are liquid
• Discussions around ultra-long Treasury securities will continue, may see further analysis at August refunding, though the probability of an “ultimate introduction is low”