Treasury bringing back 7-year note

WASHINGTON - The Treasury Department is bringing back the seven-year note and doubling the number of its 30-year bond auctions as it works to handle a soaring budget deficit projected to top $1 trillion this year.

Treasury said yesterday it will begin auctioning seven-year notes once a month starting this month, and will auction 30-year bonds eight times annually, up from the current four per year. The last time the government needed to auction seven-year notes was in 1993.

The government also said it will auction $67 billion next week in three-year, 10-year, and 30-year Treasury securities, a record amount at a quarterly refunding.

The department on Monday said it will need to borrow $493 billion during the current January-March quarter, a record amount for this period. That borrowing estimate follows actual borrowing of $569 billion in the October-December period, the record high for any quarter.

The Congressional Budget Office is projecting the deficit for the current budget year will hit a record $1.19 trillion. That estimate does not include the cost of President Obama's economic stimulus program, which is now above $900 billion in the measure being considered in the Senate.

Wall Street bond traders expect the total deficit for this year will hit $1.63 trillion. The estimates for this year are far above last year's $454.8 billion imbalance, the largest-ever annual deficit. The deficit for the first three months of this budget year, which began Oct. 1, totaled $485.2 billion, already higher than last year's record.

The deficit is ballooning because of the increased government spending to combat the worst financial crisis to hit the country since the 1930s and a recession that is already the longest in a quarter-century.