In a world awash with U.S. government bonds, buyers of the longest-term Treasuries are facing a potential shortage of supply.
Excluding those held by the Federal Reserve, Treasuries due in 10 years or more account for just 5 percent of the $12.1 trillion market for U.S. debt. New rules designed to plug shortfalls at pension funds may now triple their purchases of longer-dated Treasuries, creating $300 billion in extra demand over the next two years that would equal almost half the $642 billion outstanding, Bank of Nova Scotia estimates.
That compares with the $40 billion in all maturities of U.S. government debt that the plans bought last year.
Stronger U.S. economic growth still means the bullishness toward Treasuries may not last, according to Gene Tannuzzo, a Minneapolis-based money manager at Columbia Management Investment Advisers, which oversees $340 billion.