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U.S. Halts Sales Of New 30-Yr Bonds, Sparks Big Drop In Long-Term Rates 30s, 10s At Three-Year Low Business, people to gain as mortgages, corporates follow Treasury yield down.(A)
Byline: DONALD H. GOLD
The Treasury Department shocked the bond market Wednesday when it said it won't issue any more 30-year bonds. Instead, the Treasury will borrow from the cheaper shorter-term issues.
The move sparked a huge 5-point jump in the 30-year bond, cutting the yield to 4.89%, and drove the 10-year T-note up more than a point to yield 4.28%. Both yields were three-year lows.
The Treasury also said it will buy back $6.5 billion in Treasury debt over the next two months. But there'll be no buybacks in January, and it will mull more buybacks quarter by quarter.
The move will have a huge impact on corporate, government and consumer borrowing.
With the 30-year bond an endangered species, the 10-year note is the new "long bond."
Shorter-term debt prices fell on news they will bear more of the brunt of future Treasury borrowings. The two-year note was unchanged, and one-month T-bill returns rose 6 basis points to 2.12%.
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