NEW YORK (CNN/Money) - It's official. The 30-year bond is coming back and for Wall Street that's cause for celebration.

The Treasury Department said it would start selling new 30-year bonds early next year in a bid to lock in low financing costs and meet demand from bond dealers and institutional investors.

The Treasury said semiannual auctions of the bonds would resume in the first quarter of 2006 with a bond maturing on Feb. 15, 2036. The department also said it plans to offer $44 billion in its quarterly refunding auctions next week.

"The 30-year bond will primarily add liquidity to the long-end of the market," said Milton Ezrati, senior economist and strategist at Lord Abbett & Co. "It will mostly benefit the institutional players in the marketplace."

But Wall Street profits should largely be unaffected, said Jeffrey Kleintop, chief investment strategist at PNC Advisors. He said the issuance, in comparison to federal and corporate bonds already flooding the market, are "a drop in the bucket" for Wall Street.

Market players said that the main benefit of the 30-year bond will be in helping the government to finance its debt.

The government stopped selling new 30-year bonds in October 2001 in the midst of a budget surplus. But in the wake of a recession, weak stock market and huge war expenses, the governments surplus turned into a deficit.

That helped spur the reintroduction of the 30-year bond as the Treasury seeks to lock in low rates in order to provide more borrowing flexibility.

Kleintop at PNC said that while the move should help the government better finance the budget deficit, a host of other issues, including solid economic growth, are likely to keep rates from staying near their historic lows for much longer.

The Federal Reserve, for its part, is likely to keep an eye on the 30-year bond as a gauge for future interest rates and inflation expectations.

But Kleintop doesn't expect the reissuance of the long-term bond to have any impact on the Fed's decision making in the short run.

And while the 30-year bond reissuance will be watched closely for its effect on rates, ultimately the direction of long-term interest rates is determined by a host of economic factors.

"The supply of bonds won't have a large bearing on the yield levels or the structure of the yield curve," added Tony Crescenzi, chief bond market strategist at Miller Tabak & Co. "The influence on interest rates will come more fundamental factors such as inflation expectations, competition for capital and monetary policy."

Strategists said while any savings for the Treasury could help the budget and may translate into some savings for taxpayers, long-term rates will probably keep climbing, given moderate economic growth and rising short-term rates.

The rise in rates is eventually expected to put some pressure on the housing market, said Peter Cardillo, chief market analyst at S.W. Bach.

As long-term mortgage rates tick higher, he said, home price appreciation may slow as potential buyers tap on the brakes -- which could puncture the housing bubble that's developed in some regions.

Meanwhile, some analysts were weighing what appeal, if any, the reintroduction of the long-term bond will have on mom-and-pop investors at current rates.

"Long-term interest rates are low and I'd prefer to buy when rates are higher and more attractive," said Hugh Johnson, chairman and chief investment officer of Johnson, Illington Advisors. "As a federal government issuer or taxpayer, I'd be excited but, as an investor, I just don't see the appeal."

While a long-term bond certainly has advantages when it comes to producing a steady flow of income, Johnson said if an investor decides to cash out the coupon down the road, there's a higher risk that the price of the 30-year Treasury will fall more than a short-dated security. That means long-term bond investors would likely incur more of a loss on their investment.

But while retail investors may not be rushing to stock up, 30-year bonds may find some fans among baby boomers and pension funds.

Harrell Smith, manager of securities and investments at Celent, said as investors age, they tend to turn away from more speculative investments and focus on more stable investments such as government bonds and safer stocks with big dividends.

With the growing number of baby boomers in the U.S., there may be some spike in interest for long-term securities, but he added that it was unlikely that investors would buy individual bonds, opting instead for bond funds or other investment vehicles.

Pension funds, for instance, are expected to pick up their demand for 30-year bonds given their tendencies to look for lower risk investments that result in steady returns.

Stuart Schweitzer, global markets strategist at J.P. Morgan Asset Management, said pension funds should be big buyers of the long term bond which they will use to as safety net to hedge their investments.

"Pension funds are a ready market," he said.

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U.S. to resume 30-year bond sales

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