Updated from 10:10 a.m. EDT

The bond market got a jolt Wednesday when Treasury officials said the U.S. government might reintroduce the 30-year bond after a four-year hiatus.

A Treasury official said the government will make a decision on whether to reintroduce the onetime benchmark in August.

A reintroduction of the 30-year bond would increase the supply of Treasury notes on the market and help the federal government finance the ballooning deficit.

The U.S. stopped issuing 30-year bonds in October 2001 because it was concerned about the cost of paying interest on the notes. The decision came at a time when the U.S. government was posting a budget surplus and Treasury officials saw less need for future borrowing.

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But the deficit has resurfaced in recent years under the administration of President Bush. A combination of tax cuts and spending on the wars in Iraq and Afghanistan have fueled a return to big budget shortfalls.

John Lonski, an economist with Moody's, says the government's original decision to drop the 30-year was out of step with the rest of the bond market. He notes that corporations have continued to issue 30-year bonds and some European countries have even begun to issue 50-year bonds.

The federal government's decision to stop issuing 30-year bonds left the market with an imprecise bench mark.

"The financial community has wanted a 30-year Treasury bond to better calculate future pension obligations...and as a benchmark for long-term corporate bonds,'' says Lonski. "It creates a problem when trying to calculate the present value of long-term valuations."

The decision to suspend the 30-year bond gave new prominence to the 10-year Treasury, which became the de facto benchmark for measuring the performance of long-term bonds.

Yields on government bonds have bounced around since word of the Treasury's deliberations broke. Recently, the 10-year note was down 14/32 in price to yield 4.22%, while existing 30-year bonds were down more than 2 points in price to yield 4.62%.