“For the first time since Word War II, owning U.S. Treasuries is a riskier bet than owning German bonds.”
From The Daily Reckoning. This headline was the most important thing I read today. The follow with:
On the basis of credit default swaps, which are used to speculate on a government’s ability to repay debt, the 10-year note reached a record high of 16 basis points on March 12. German bonds traded at 15 basis points, also a record. A decline in these spreads shows improving confidence in the government’s ability to pay…an increase shows the opposite.
“That’s certainly eye-opening,” writes our esteemed colleague Chris Mayer. “The market consensus is that you stand a greater chance of default investing in U.S. Treasuries than in German bonds.”
Officials in Beijing must keep shaking their heads. China holds more than $387 billion in Treasury securities.
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Posted: May 14th, 2008 under Americas, Asia, Europe, Fixed Income, General.
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