The Need For Longer-Dated US Debt
For the last several years, historically low interest rates have provided the US government an attractive option to extend the average maturity of US Treasury obligations, saving taxpayers billions of dollars. Two weeks ago, the Federal Reserve raised not only their target Federal Funds rate, but also their expectations for the number of rate hikes in 2017. Before the Fed initiates additional hikes, and before inflationary pressures push market rates higher, the US Treasury should consider extending the average maturity of US debt through the issuance of longer-term debt or by weighting upcoming issuances to the longer end of the spectrum.
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