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Does this mean that the demand for new treasuries is drying up? That would suggest that they would need to raise interest rates further to attract more money?
by cl0ckt0wer 4y ago
Does this mean that the demand for new treasuries is drying up? That would suggest that they would need to raise interest rates further to attract more money?
They're going to try to rebuy the older low interest bonds but that brings "significant operational complexity". Why would they give the money back that they just got by selling bonds?
Here's the report directly.
"Report to the Secretary of the Treasury from the Treasury Borrowing Advisory Committee | U.S. Department of the Treasury" https://home.treasury.gov/news/press-releases/jy1073 https://home.treasury.gov/news/press-releases/jy1073
- readthenotes1 4y ago"Why would they give the money back that they just got by selling bonds?" I was confused at first about who would be doing the buying but your link makes it clear that the Treasury is thinking about buying back the higher priced bonds while at the same time they are selling the lower price bonds. I'm still confused...
- pgayed 4y agoThe vast majority of bond market is not new issues. (I don't know the exact “age distribution” of bonds but that would be interesting.) If old bonds have pitiful rates compared to new issues, the pool of buyers for the old is thin and bond prices suffer. This is especially bad for those in retirement who sell bonds to fund living expenses.