The U.S. Treasury is considering the restoration of 30- year bond that was cancelled in October 2001. The final decision has to be announced on August 3, but analysts have decided that this is almost a done thing.

The main reason for the issue is believed to the desire to cover the US huge budget deficit at a historically low interest rate. The US fiscal gap is expected to surge to $427 billion this year, up from the previously expected $420 billion. The timing is also good as long-term interest rates remain low.

Nouriel Roubini, an economics professor at New York University, said: "Treasury is finally recognizing that we will have huge deficits from here to eternity. We discontinued the 30-year bond when we expected $5 trillion cumulative fiscal surpluses. Now we are facing $5 trillion-plus cumulative fiscal deficits."

Besides, the government has realized that investors are craving a longer-term bond as these low-rick instruments are just not enough in the market. It is difficult for a corporation to produce such a bond, while governments have plenty of projects that need to be financed with long-term debt. This realization prompted the governments of European nations to prolong the maturity of their bonds to as much as 50 years, and the US Treasury is following suit.

The Treasury representatives, however, claim that deficit is not the issue behind the re-emergence of the long-term bond.