30-year Treasury bonds were discontinued because it is was felt that
long-term borrowing is outmoded, and because discontinuing the bonds
saves the government money.
"At the end of 2001, when forecasters were projecting years of budget
surpluses, the Treasury Department stopped issuing the 30-year bond
because it no longer needed to issue as much debt to run the
government. The long bond was considered a relatively safe investment
that was popular with insurance companies, pension funds and others
seeking a long-term tool. Because longer maturities typically come
with high yields, the government paid more to 30-year bondholders than
to owners of shorter-term Treasuries. That made the 30-year bond the
likely choice to kill when the budget was in the black."
USA Today
http://www.usatoday.com/money/perfi/bonds/2003-07-17-30year_x.htm
"The Treasury Department issues bills, notes, and bonds to finance
federal government debt, which, even though the government has been
running a budget surplus, still exists from prior borrowing. The
bills, notes, and bonds vary in maturity from under a year to, until
recently, 30 years. With all these different options, and with recent
surpluses, the government determined that it didn't need the 30-year
bond to keep our financial house in order.
That's most likely because the government no longer needed to entice
investors with such a long maturity. The cost to the government of any
debt is its interest rate, and that varies according to future
inflation expectations, because investors want at least some kind of
return above the inflation rate. Not only that, but they demand a
higher rate for a longer term, because the longer the horizon, the
harder it is to predict the inflation rate."
The Motley Fool
http://www.fool.com/news/foth/2001/foth011112.htm
"The U.S. government said Wednesday it no longer will issue 30-year
Treasury bonds because they don't meet the government's cash needs and
discontinuing them will save U.S. taxpayers money.
'We do not need the 30-year bond to meet the government's current
financing needs, nor those that we expect to face in coming years,'
Peter Fisher, the Treasury Department's Under Secretary for Domestic
Finance, said in prepared remarks.
Fisher said the decision would cut borrowing costs, since the
government currently pays a higher interest rate for long-term bonds
than for short-term bonds."
CNN Money
http://money.cnn.com/2001/10/31/markets/longbond/index.htm
There has been some discussion of reintroducing 30-year bonds:
"As Federal Reserve Chairman Alan Greenspan told lawmakers Wednesday,
times have changed. The White House on Tuesday projected the deficit
will reach a record $455 billion this year and $475 billion in 2004.
The administration cited slower-than-expected economic growth and the
costs of the Iraq war for the rising deficits.
Analysts say Treasury should reintroduce 30-year bonds to spread the
higher levels of debt across a broad time spectrum, rather than
flooding, and perhaps distorting, certain parts of the market. There
seems to be significant demand for longer bonds, industry analysts
say. The 10-year note is the longest maturity the Treasury now
sells...
Treasury Secretary John Snow, however, told USA TODAY last week that
there were 'no present plans' to reintroduce it."
USA Today
http://www.usatoday.com/money/perfi/bonds/2003-07-17-30year_x.htm
Google search strategy:
Google Web Search: "30 year treasury" + "because"
://www.google.com/search?hl=en&ie=UTF-8&q=%2230+year+treasury%22+because
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