Do you anticipate strong ongoing demand for the long bond? How will the bonds comeback shape the fixed income markets, particularly with regard to duration?
We’ve already seen one long-bond auction for which demand was extremely strong. I believe future auctions will see the same type of demand. There has been a growing need for longer-dated assets to offset longer-dated pension liabilities. We’ve observed this trend not only here in the United States, but in markets abroad. Several countries in Europe have issued very long-dated bonds which have been met with robust demand. The desire to match long-dated liabilities with long-dated assets is becoming a global phenomenon. Do I believe these longer-dated bonds will lengthen the overall duration of the fixed income market or select benchmarks? At this point, I dont believe there will be any significant changes in duration. There currently is just not enough issuance to have that big of an impact. Do you have any concerns about the growing federal deficit and its impact on fixed income securities? All things equal, a growing federal budget deficit will push interest rates higher. However, the
