Bringing it back does several things for market participants. First, those accounts which need longer duration in high-quality (AAA) debt now have the ability to use the 30-year as part of their mix.

Another major problem we've seen in the market is that with no 30-year, all the speculation in derivative products utilized the 10-year note. This has caused major disruptions in the delivery process. I saw recently that the short positions in the futures market were four times the issuance of the 10-year note. Unless those positions are cleaned up in the futures market prior to delivery date, there's going to be another situation where people are short more bonds than are being issued to a great degree. So by bringing back the 30-year, there will be another vehicle for use on the derivatives. It should have a positive effect by helping to alleviate these delivery problems.

It's premature to discuss how effective it will be because there are still a lot of unknowns surrounding the 30-year bond. We know that it's going to come twice a year, and we know that the first issuance is going to be in February 2006. We don't know what the size is, nor do we know what the reopening size will be in August 2006.

If the Treasury decides to come with a smaller amount – something in the $12–15 billion range – the issue will probably be well received. If they choose to come with a greater amount – if they feel that we do have a low interest environment right now and a larger issue will save interest expense if rates rise in the future – it may not be as well received, since demand by both foreign and domestic investors may not match the additional supply.

My guess is initially the Treasury will probably come with a smaller amount. I think that is what the market would like to see, and I think the Treasury would like to see the issue be well received. But until we get those details, which we won't know until January, we really don't know how effective or how important it will be.

Are there any disadvantages to bringing back the 30-year bond?

Personally, I don't think so. I think it alleviates a lot of the problems in the market place so I'm very much in favor of reissuing the 30-year bond. Certainly insurance companies and large portfolios that need to have longer duration in their portfolios of high-quality debt are very happy to see it come back.

So this will be an attractive option to institutional investors?

For the most part, all Treasury securities are attractive to foreign buyers and many domestic institutional investors. We don't really see a great deal of non-institutional investors getting involved with Treasuries. Most individual investors look for a little more yield than is available in the treasury market.

Any last thoughts on Treasury bonds?

Treasury securities have always been and always will be considered the safe haven of last resort. They are the highest quality of debt available, so whenever there is a geo-political situation or difficult economic situation of some sort, everyone runs for Treasuries. This is called a "flight to quality," and 30-year bonds will be part of the equation.