US Treasury suspension of long bond lifts spirits

The US Treasury's surprise decision to halt issuance of 30-year debt has brought about a significant flattening of the yield curve resulting from a narrowing of the spread between 10- and 30-year paper. The move, which indicates that US Treasury issuance has become an economic stimulus tool for the Federal Reserve, has brought down mortgage rates and the cost of borrowing for corporates. The announcement caused an initial rally at the longer end of the curve, although many of the gains were quickly given back. The rally was not confined to the 30-year paper, with 10-year debt making sig...