The US Treasury is seriously considering a 50-year bond

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"We are considering issuing a 50-year bond, which we could call a very long bond," Mnuchin said in an interview with CNBC's "Squawk Box." "We think there is a demand for this and it is something that we will consider very seriously for next year."

Historically low interest rates, ranging from 2% to 2.25%, could offer the Treasury Department an attractive opportunity to respond to such a proposal, but Wall Street has so far had a timid response.

Long-term investments generally earn more interest than short-term investments, making them a good choice for investors. But the yield curve has recently been reversed, pushing long-term Treasury yields below short-term bonds. This means that people should be less interested in long-haul, which makes them potentially less attractive than in normal situations.

"Personally, I think it's a good thing to extend borrowing capabilities," said Mnuchin, pointing out that the moment was "pretty attractive" for the US government, which wants to expand and derive the US Treasury markets.

The Trump administration would also have the added benefit of lowering borrowing costs as it faces a budget deficit of nearly $ 1 trillion.
Rates have fallen around the world since 2018, and some are now in negative territory, pushing investors to longer-term US bonds.

The Treasury Secretary said that he foresaw that investors could be even more incentivized to buy US bonds as a result of the European Central Bank's decision to reduce sub-zero interest rates.

"I would not be surprised if many people start selling foreign bonds at negative rates and buying US Treasury securities, which would have the effect of reducing these spreads," said Mnuchin.

The secretary avoided commenting on the Federal Reserve's monetary policy decisions when he was directly questioned about President Donald Trump's decisions. tweet on the subject Wednesday.

Instead, Mnuchin pointed to the challenges Europe faces with negative rates, suggesting that it would be more difficult for banks to earn money and could undermine the economy. economy.

"It is very difficult for banks to earn money with negative interest rates, and if banks can not make money, it is difficult to have a good economy, "said Mnuchin.

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