That was the statement made in a Bismark, North Dakota speech this week by Treasury Secretary John Snow, according to a Dow Jones news report.
The issue is of interest to the retirement services community because the 30-year-bond has often been used for pension plan calculations. Not only that, but demand for the investment vehicles has been hot both on Wall Street and overseas where several European countries consider issuing debt with maturities of up to 50 years. Last month, there was strong demand for France’s new 50-year bond (See European Nations Hungrily Eye Government Debt Issues ).
“We always, of course, are reviewing that situation, monitoring it, studying it, analyzing it and thinking about it, but everything I’ve seen leads me to believe that we made the right decision and that that remains the right decision,” Snow told reporters, answering questions after making remarks to students at Bismarck High School, Dow Jones reported.
Treasury announced in October 2001 that it would stop selling the 30-year bond, citing forecasts that the government would return to surplus in a few years – and thus making 30-year-bond issuance unnecessary.
Such surpluses never came to pass. The US posted record budget deficits in fiscal years 2003 and 2004. The White House projects the deficit to hit a record for a third straight year in fiscal 2005.
Snow’s remarks about Treasury’s current position on the 30-year bond is largely consistent with recent remarks from Treasury debt management officials, Dow Jones said. Those officials have said they have no plans to bring back the bond now, but are open to hearing suggestions from the bond markets on the issue.
US Assistant Treasury Secretary for Financial Markets Timothy Bitsberger recently said Treasury doesn’t see any need to change its issuance calendar to finance US budget deficits, but suggested Treasury is keeping an open mind about the 30-year bond.
“We see no reason to change anything at this time, but we don’t want to be obstinate about it either,” Bitsberger said on March 14, answering questions from the audience about the 30-year after delivering a speech at the Institute of International Bankers annual Washington conference.
Earlier this month, speculation Treasury may revive the bond was heightened by a direct statement from US Treasury Assistant Secretary for International Affairs Randal Quarles in a Dow Jones Newswires-CNBC interview. Quarles said Treasury is “certainly open to hearing the case for reinstatement of the 30-year bond. The circumstances in which the issuance of that bond was discontinued have changed.”
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