As the rest of Washington fixated on tax reform and a newFederal Reserve chair last week, the Treasury Department unveiled aborrowing strategy lacking fanfare but having potentially bigimplications for the bond market and the U.S. economy.

In a step that could limit upward pressure on long-term interestrates from bigger budget deficits and a reduced Fed balance sheet,the Treasury will break from a policy in place since 2009 and stopattempting to lengthen the maturity of the government's debt.

“The Treasury is trying to avoid making the mistake of throwingout long-maturity debt where there isn't sufficient demand, whichcould really steepen the yield curve,” said Gene Tannuzzo, a moneymanager at Columbia Threadneedle Investments, which oversees $484billion. It “seems to be making an effort to avoid a yieldshock.”