We haven’t heard much about Steve Mnuchin since the Trump administration ended, but the former Treasury Secretary and Hollywood financier is in the news today.
He says the US should ditch the 20-year bonds he introduced. A look at today’s yield curve shows why:
- 10 years 3.95%
- 20 years 4.33%
- 30 years 4.24%
This curve skew is costing American taxpayers a lot of money, as Bloomberg highlights:
Since the Treasury Department re-auctioned 20-year bonds four years ago, their sale has added about $2 billion a year in interest expenses to what the government would otherwise have paid, according to simple math. That works out to about $40 billion over the life of the bonds.
“I’m not going to continue issuing them, they’re expensive for taxpayers,” Mnuchin said.
The Treasury will have to make some big decisions in the coming years as the deficit continues to balloon.
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