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Mnuchin Says 100-Year Treasury Bond Possible

Reuters

   WASHINGTON - U.S. Treasury Secretary Steven Mnuchin on Thursday said
   the United States would issue 50-year bonds if there was "proper
   demand," amovedaimed at "de-risking" the government's $22 trillion of
   debt and locking in low interest rates.
   "We are going to start with 50 years, and if the answer is 50 years is
   successful, we'll consider 100-year bonds," Mnuchin said in an
   interview withThe New York Times'DealBookand streamed online live,
   adding that he began looking into the possibility of ultra-long U.S.
   bonds two years ago.
   The longest-dated U.S. Treasury currently is 30 years.
   U.S. President Donald Trump has proposed a different fix for the rising
   cost of the record U.S. debt, calling Wednesday on the "boneheads" at
   the Federal Reserve to reduce interest rates to below zeroso as
   toreduce interestrate payments.
   The Fed is widely expected to cut interest rates by a modest quarter of
   a percentage point next week when U.S. rate-setters meet.

   Powell's view

   Fed Chair Jerome Powell and other policymakers see U.S. economic
   conditions as still generally favorable despite a global slowdown and a
   still-unresolved U.S.-China trade war, and they have consistently
   pushed back against the notion of negative rates or of setting rates to
   cater to political pressure.
   On Thursday,the European Central Bank pushed its target rates further
   into negative territory to try to boost growth, prompting a complaint
   from Trump that Europeans are "paid" to borrow money, while the Fed
   "just sits, and sits, and sits."
   Asked about negative interest rates, Mnuchin indicated that hewas not
   the fan that his bosswas.
   "Low interest rates are good for economic growth," Mnuchin said. "I
   think negative interest rates--unclear whether they are good for
   economic growth. I think that negative interest rates are bad for
   banking business. It's hard to grow an economy without having a healthy
   banking business."
   Mnuchin did predict that the ECB's easing policy could push more global
   capital into U.S.Treasurys, whose yields, though historically low, are
   much higher than those on German government bonds.
   "My expectation is you are going to see a big flow of funds" into
   10-yearTreasurys, Mnuchin said. That would push U.S. bond prices
   higher, and yields lower, giving a potential added boost to the case
   for issuing ultra-long U.S. bonds to lock in low borrowing costs.

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