As the rest of Washington fixated on tax reform and a new Federal Reserve chair last week, the Treasury Department unveiled a borrowing strategy lacking fanfare but having potentially big implications for the bond market and the U.S. economy.

In a step that could limit upward pressure on long-term interest rates from bigger budget deficits and a reduced Fed balance sheet, the Treasury will break from a policy in place since 2009 and stop attempting to lengthen the maturity of the government's debt.

"The Treasury is trying to avoid making the mistake of throwing out long-maturity debt where there isn't sufficient demand, which could really steepen the yield curve," said Gene Tannuzzo, a money manager at Columbia Threadneedle Investments, which oversees $484 billion. It "seems to be making an effort to avoid a yield shock."