The book mentioned regarding TIPS, the US gov taxes the part for inflation adjustment. This feature reduces the attractiveness of TIPS as investment for tax-paying entities. This is interesting to know. I have owned a certain amount TIPS since 2003 and never know have to pay tax on it. Neither the US Treasury sent me any notice about it. Any idea? In addition, it menitoned the US Dept. of Treasury has STOPPED issuing Treasury Bonds (as of this writing - which I assume the txt book was written in around 2006 or 2007?). Why?
ahhhh…good questions. There are 3 main kinds of treasury issues 1. treasury bills 2. treasury notes 3. treasury bonds Technically, a treasury bond is an issue with a maturity that exceeds 10 years. The only issue that has been issued in the past that exceed 10 years was the 30 year issue. Therefore, the only “treasury bond” that existed was the 30 year treasury bond. When they stopped issuing the 30 year issue, they “in effect” stopped issuing all treasury bonds. However, they started issuing them again…and therefore treasury bonds are now issued (the only treasury bond currently issued is a 30 year). However, not to confuse you, but I believe now and then they issue odd issues…such as a treasury bond that is 29 1/2 maturity. The treasury used to issue 3 year issues, then stopped.
I see. Thx. I was wondering what casued them to be on and off issuing T-Bonds? Time horizon: in US, T-Notes usually more than 2 yrs less than 10 yrs. And it seems each major developed country has its ideas of the time frame of their gov bonds. It’s such a colorful, wonderful bond world global-wide.
I believe they stop and start issuing some treasuries due to liquidity issues. The fed’s website explains it all.
The Treasury issues bonds not the Fed so it’s probably on the Treasury website. The best reason to stop issuing bonds is that the govt doesn’t need to borrow money to fund over-spending. That happened at the end of the Clinton administration, for example. Anyway, Treasury debt isn’t callable (since 1985) so issuing 30-year uncallable debt is a pretty extreme thing to do. Corporations don’t do that anymore (at least not that I know of) so the question ought to be more like why does the govt do it? The problem is that when they stop all kinds of weird things happen as demand for off-the-run bonds increase. I think the govt does it cuz they’ve always done it and they think it is some healthy thing to do for the economy. Or maybe they are short long bond futures.
JoeyDVivre Wrote: ------------------------------------------------------- > I think the govt does > it cuz they’ve always done it and they think it is > some healthy thing to do for the economy. Or > maybe they are short long bond futures. For economy? Maybe raise fund for Iraqi War? Can Treasury short? I doubt.
It was a quip. No, the govt can’t sell its own bonds ahead in the futures market.