The United States is thinking of going into debt over very long periods


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The United States is thinking of going into debt over very long periods
GETTY IMAGES NORTH AMERICA / AFP / Archives / Pete Marovich

US Treasury Secretary Steven Mnuchin said the possibility of issuing sovereign bonds with very long maturities was considered "very seriously" by the US administration.

"If the conditions are good, then I could glimpse take advantage of long-term borrowing and implement" this strategy, said Mnuchin in an interview with Bloomberg.

Two years ago, Mr Mnuchin had already asked his teams to explore the possibility of issuing very long-term loans.

Launching very long-term government bonds, such as over 50 or 100 years, dubbed "Methuselah" loans, returns to the table as bond yields fall.

The maximum duration of US Treasuries is currently set at 30 years and yields at this time are currently at historically low levels.

The ten-year rate on US treasury bills is currently lower than the two-year bond rate, a phenomenon known as the "reversal of the yield curve" which is particularly feared by the financial markets because it is considered the leading indicator of a recession.

The curves are considered "normal" when the rates associated with an investment are all the higher as their maturity is remote.

"The idea of ​​a good very long term had already been raised under the Obama administration, but had never gone beyond the project stage, mainly because of political considerations," said recently experts Mirabaud Securities Geneva.

While the United States still has positive rates, the eurozone is in an unprecedented situation, with negative 10-year bond yields flicker day by day and go from record down to record low, especially in Germany.

The arrival of the United States would be a turning point in the very long-term borrowing market, hitherto used by countries of lesser economic size. For example, Austria, Argentina, Mexico, Belgium and Ireland have already issued centenarian loans.


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