The US Treasury on Wednesday surprised the markets by announcing it was considering reissuing 30-year bonds - a move that would reverse a decision made in 2001 to concentrate on shorter maturities.
Government officials denied the change was triggered by the need to fund rising US debt or to support pension system reform.
"This is about diversifying our portfolio, increasing flexibility and widening the investor base," said Tony Fratto, Treasury spokesman. "This decision in no way has anything to do with deficits or prospective costs that may be associated with social security reform."
However, the surprise announcement comes as the Bush administration is pushing for social security reform - including the introduction of personal investment accounts using diverted payroll taxes - which could cost billions of dollars.
It highlights the degree to which America's fiscal position has deteriorated since 2001, when it abandoned the bonds claiming that they were no longer needed because the deficit was shrinking.
It also comes amid growing demand from pension funds for long-term assets, not least because there is rising regulatory pressure on them to match assets more closely to liabilities as populations age.
"Rates are very low and there is global hunger for this paper," said Alan Ruskin, of 4Cast economic consultancy.
He said these pressures could make it relatively cheap for the government to fund itself with 30-year bonds.
Micah Green of the Bond Market Association in New York said: "If you look at the pension issues, the demographics and the fact that many funds are moving to invest more in fixed income, there are clearly many reasons that it makes sense."
These pressures have already prompted a number of European governments to issue long-term bonds this year. The US Treasury's decision will not be announced until August.
If the US does proceed, the bonds could be sold again early next year, officials said. They expect that annual issuance of $20-30bn would be sufficient to create a liquid market.
The announcement pushed prices for previously issued 30-year bonds down almost two full points, sending surging to 4.59 per cent from 4.49 the previous day.
The yield curve steepened sharply, with the gap between 10 and 30-year yields widening to 40 basis points from 31 basis points on Tuesday.
The announcement was welcomed by the Chicago Board of Trade, which last week said it was planning an initial public offering. Any re-issuance of the 30-year bond is likely to boost its business significantly because the 30-year contract was one of its busiest contracts until 2001.
Charles Carey, CBOT chairman, predicted a multitude of benefits. "A liquid market for debt across the entire yield curve would lower risk profiles for long-term investors and would serve an important role in the pricing of other long-term debt instruments," he said.
Additional reporting by Joanna Chung in London
