Record Treasury Yeild !!!

7/27/09

Let's look at why people over the world keep buying US Government Bonds!!! Or kinda bail us out of this big mess!!

Bloomberg is reporting Real Yields Highest Since 1994 Aid Record Debt Sales.

The highest inflation-adjusted yields in 15 years are helping provide the Treasury with record demand at auctions as the U.S. prepares to sell $115 billion of notes this week.

Treasuries are the cheapest relative to inflation since 1994 after consumer prices fell 1.4 percent in June from a year earlier. The real yield, or the difference between rates on government securities and inflation, for 10-year notes was 5.10 percent today, compared with an average of 2.74 percent over the past 20 years.

The gap helps explain why investors are buying bonds after losing 4.8 percent this year, the steepest decline on record, according to Merrill Lynch & Co. indexes that date back to 1978.

My comment: Wow!! 5.10% for 10 year government bonds. What a very damn attractive interest rate. I would love to park my saving in that, wouldn't anyone??! Are US is going to issue more damn bonds with higher interest rate on the road??! I bet they have no choice. I expect to see more government bonds with much much higher interest rate months later. We will see!!