US government considers new treasury bonds

The U.S. government announced Wednesday that the Treasury will decide in August whether to begin again to issue 30-year bonds, which it stopped issuing in 2001.

The announcement caused prices on long-term U.S. government Treasury bonds to fall sharply and yields to rise.

Prices on 30-year Treasury bonds fell nearly two points, and yields went up to 4.60 percent. They had been 4.49 percent on Tuesday.

By mid-afternoon in New York, yields had fallen to 4.618 percent, 13.3 basis points higher. 10-year Treasury bonds rose 4.8 basis points to 4.216 percent.

Prices on long-term bonds in Europe and the UK followed suit as prices fell and yields rose on Wednesday. The yield on the 30-year gilt was up 4.5 basis points to 4.476 percent, and the 30-year Bund rose 5.3 basis points to 3.988 percent.

Some European countries have continued issuing 30-year bonds, and France issued a 50-year bond in February. The UK will issue a 50-year bond later in May.

The effect the announcement had on markets indicates that investors’ first reaction to the idea of new U.S. Treasury 30-year bonds is a negative one. It also made it seem that the market was taken by surprise at the news.

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