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The Long-Term Treasury Bond futures are being launched in response to strong customer demand for a contract that mimics the duration of a 30-year Treasury bond," said Robin Ross, CME Group Managing Director of Interest Rate Products.
Use of the 30-year Treasury bond (no longer issued), which had been used as the basis for calculations for many years, proved to be a problem when long-term rates plunged in recent years.
For a two-year timeframe, the legislation will replace the 30-year Treasury bond rate with a rate based on long-term corporate bonds.
The bill would provide a short-term, two-year pension funding fix to replace the current 30-year Treasury bond interest rate that is used by many employers to calculate the amount of money they must set aside in their employee pension plans with a conservative corporate bond rate for two years through 2005.
8 without taking final action to replace the current 30-year Treasury bond interest rate as the rate employers must use to calculate employee pension plan liabilities.
ERISA requires employers to use a variation of the 30-year Treasury bond rate for these calculations; however, in 2001 Treasury stopped issuing the 30-year bond.
With all the drama and finality that the prestigious Wall Street Journal could muster, it declared this past May 3 that the reign of the 30-year Treasury bond as the benchmark for pricing fixed-income securities in the $14.
Short rates may move higher if the Fed keeps tightening while long-term bonds may stay in a trading range," with the yield on the 30-year Treasury bond likely to fluctuate between 5.
Breaking news today is that the 30-year Treasury bond, which has not been issued since October 2001, might return.
While chair of CBF, Netzel lobbied against pegging the discount rate for defined benefit pension plans to the 30-year treasury bond rate.
Replacing the 30-year Treasury bond rate with a rate based on a high- quality composite corporate bond rate has been thoroughly analyzed and enjoys bipartisan support from key members of Congress, plan sponsors and employee organizations.
The 30-year Treasury bond slipped 5/8 point to yield 5.