Treasury to issue new 20-year bond

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The Treasury Department will auction a 20-year bond in the first half of the year, the agency said late Thursday.

“The Treasury Department appreciates the input of market participants, including the Treasury Borrowing Advisory Committee and primary dealers, for their contributions to Treasury’s decision to launch a 20-year bond,” said Treasury Secretary Steven Mnuchin.

Over the past few years, Treasury has looked at the possibility of selling new types of securities. It has debated auctioning 20-, 50- or even 100-year bonds and looked at the possibility of offering floating-rate notes linked to the Secured Overnight Financing Rate.

But after the Treasury received feedback from market participants, it decided on the 20-year security and said it expects there will be strong demand from investors for them. Treasury plans to issue the bonds on a regular basis in benchmark size.
“We seek to finance the government at the least possible cost to taxpayers over time, and we will continue to evaluate other potential new products to meet that goal,” Mnuchin said.

Housing starts up, industrial production job openings down
Housing starts rose 16.9% in December to a seasonally adjusted annual rate of 1.61 million, the Census Bureau and the Department of Housing and Urban Development reported Friday.

The read was above the 1.38 million rate predicted in a survey of economists by IFR Markets.

December’s number is up from 1.38 million in November and 40.8% higher than the 1.14 million in December 2018.

Single‐family housing starts rose 11.2% in December to a 1.06 million rate, up from 949,000 in November. The December rate for units in buildings with five units or more was 536,000.

Building permits fell 3.9% to an annual rate of 1.42 million in December, from November’s rate of 1.47 million. The rate is 5.8% higher than the 1.34 million reported in December 2018. Single‐family permits slipped 0.5% in December to a 916,000 rate from 921,000 in November. Permits in buildings with five units or more were at a rate of 458,000 in December.

In 2019, permits totaled 1.37 million, up 3.9% from 1.32 million in 2018.

Separately, the Federal Reserve reported Friday that industrial production fell 0.3% in December, while capacity utilization for the industrial sector fell 0.4% to 77.0%.

Economists surveyed by IFR Markets had expected industrial production to have fallen by 0.1% and capacity utilization to have come in at 77.1%.

The decline in production came as a decrease of 5.6% for utilities outweighed increases of 0.2% for manufacturing and 1.3% for mining. The Fed said that the drop for utilities resulted from a large decrease in demand for heating due to unseasonably warm weather in December.

For the fourth quarter as a whole, total industrial production declined at an annual rate of 0.5%. Total industrial production was 1.0% lower in December than it was a year earlier.

The decrease in capacity utilization brings it to a rate that is 2.8 percentage points below its long-run (1972–2018) average, the Fed said.

Also on Friday, the Labor Department reported that the number of job openings fell 561,000 to 6.8 million in November.

The job openings rate fell to 4.3% while the job openings level decreased 520,000 for total private employment and edged down 42,000 for government. The largest decreases in job openings were in retail trade and construction.

Over the 12 months ending in November, hires totaled 69.8 million and separations totaled 67.5 million, yielding a net employment gain of 2.3 million.

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