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Deal of the Century By Spencer Jakab

It's a case of dueling narratives. President Trump asserts trade talks with China are underway, while officials in Xi Jinping's government deny that's happening . Stocks in Europe and Asia got a lift anyway, but momentum is starting to fade for a fourth straight U.S. gain Friday.

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Big problems require bold solutions. They don't get much bigger than America's runaway fiscal deficit.

Before the recent tariff-induced chaos, Treasury Secretary Scott Bessent floated a plan to stabilize government borrowing levels and to boost issuance of 10-year Treasury notes to lock in a predictable borrowing rate. It's precisely such longer-term instruments that have seen their yields gyrate lately, though, after foreign investors questioned the consistency of America's government.

Right now, the U.S. sells more bills-the shortest-term debt-than is ideal. If markets settle down, there's a quicker way to achieve Bessent's goal of stretching out the average maturity. Private companies and several universities -they include M.I.T., Caltech and Rutgers-have issued century bonds lasting 100 years. Should America give it the old college try?

Hedge funds love trading long-term bonds, particularly those not paying much interest, because they're so volatile. In market lingo, such bonds have long durations, making them hyper-sensitive to interest-rate moves. Meanwhile, pension funds and insurers, who are on the opposite side of the risk spectrum, are always looking for ultralong-term debt with high ratings because they need to match their long-term liabilities with similar assets.

Sadly, the U.S. missed a window of opportunity . Back in 2020, yield-starved investors bought a century bond sold by Austria sporting an interest rate-not a typo-of 0.85%.

"Viel Glück," as they say there. With a little over 95 years remaining, those bonds now fetch 35 cents on the euro. Investors aren't worried about being repaid, but the price shows how unattractive the bonds are now that interest rates are higher.

Austria's bond was a guaranteed dud for any normal buy-and-hold investor. There are juicier century bonds that have left both sellers and buyers pleased, though.

Although it has defaulted on its debt nine times, Argentina sold one in 2017. WSJ columnist James Mackintosh recently pointed out that investors who stuck with " the dumbest investment in the world " have made more money than owning risk-free U.S. Treasury debt.

One U.S. official has proposed an, um, interesting way to introduce century bonds even if markets aren't receptive. The chair of President Trump's Council of Economic Advisers, Stephen Miran, informally suggested asking foreigners who own trillions in short-term U.S. debt to consider swapping it for century bonds. The carrot could be a break on tariffs and continued military protection. The stick? A "user fee" on debt they own.

Making investors an offer they can't refuse is a non-starter. What about showing some budgetary discipline and then selling century bonds to willing buyers? We'd be telling our grandchildren about it.

Stocks I'm Watching

Alphabet : Google "relief rally." The search engine's parent company reported quarterly operating income of $30.6 billion late Thursday, solidly beating Wall Street's forecasts . Its shares jumped in premarket trading.

Intel : The troubled chip company posted a quarterly loss and gave a weak revenue outlook. Executives said tariffs would boost costs and sap demand , after an initial rush to buy ahead of the levies. Shares dropped 5% ahead of the open.

Skechers USA : Don't get too comfortable: The shoe company withdrew its annual guidance due to economic uncertainty stemming from the trade war. Shares fell premarket.

T-Mobile US : The telecom provider added fewer subscribers for postpaid phone plans than expected last quarter. Shares fell before the opening bell.

Saab : The European defense company, one of several to have benefited from the continent's rearmament this year, said sales rose more than 10% last quarter and profit topped forecasts. Shares gained 3% in Stockholm.

Lazard , Colgate-Palmolive and Phillips 66 are among the companies due to report earnings before the bell.

CONTENT FROM: Guidehouse What's reshaping financial services?

"This is a critical time for financial services transformation. Balancing strategic priorities, investment allocations, technological innovation, and regulatory flux is essential to navigating the evolving landscape." -SHY Jessica Stallmeyer, Partner and Financial Services Leader

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About Me

My name is Spencer Jakab and I've been musing about money and markets for more than 30 years, including editing The Wall Street Journal's Heard on the Street column for a decade, writing two investing books and running a team of stock analysts at a global investment bank.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

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April 25, 2025 06:56 ET (10:56 GMT)

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