NEW YORK -- The Treasury Department's decision to reintroduce the 30-year bond starting next year will give consumers a safe investment option with a long-term maturity and could help boost rates on other securities.
Here are some questions and answers about the possible financial impact:
Why do this now?
The government borrows money from the public to fund the federal budget deficit by selling bills, notes, and bonds.
Lyle E. Gramley, a former governor of the Federal Reserve, said that by bringing back the 30-year bond, the government will be able to lock in lower interest rates for a longer period of time.
Who is likely to buy 30-year Treasury bonds?
Jill Hershey, vice president for legislative affairs with the Bond Market Association trade group in Washington, D.C., believes consumers and institutional investors -- pension funds, insurance companies, asset management firms -- will be interested because US government securities are known for ''safety and soundness."
So they're going to be a good deal for consumers?
That depends largely on how much consumers can earn on short- and medium-term investments compared with what they can earn tying their money up for 30 years, said Greg McBride, a financial analyst with Bankrate.com in North Palm Beach, Fla.