Corporate less risky than treasury bills.

[clifp]

A new Reuters report Obama pays more than Buffett shows that medium term treasury have higher yields than corresponding debt from most credit worth companies, including P&G, Johnson & Johnson, and Berkshire Hathaway and the Royal Bank of Canada.

Now the difference is tiny only a 3 or so basis points, but it is pretty much unprecedented. I think the bond market has it right. If I was an international investor my confidence that Progter & Gamble or Johnson & Johnson would pay me back my in money in 30 years is much higher than Uncle Sam. What is surprising is that the rates are even lower for short-term bonds. Now the bonds are all yielding a pathetic 1% or so, but still pretty amazing.

 

[Nords]

A new Reuters report Obama pays more than Buffett shows that medium term treasury have higher yields than corresponding debt from most credit worth companies, including P&G, Johnson & Johnson, and Berkshire Hathaway and the Royal Bank of Canada.

Berkshire is notorious for getting investors to throw money at their issues, including the SQUARZ a few years back that actually had a negative yield.

A lot of Treasuries have been dumped on the market over the last 18 months, and not so many corporates. I wonder if the yield difference is just a reflection of a temporary pent-up demand by institutions and others trying to restock their corporate asset allocations.

But it's an overwhelming temptation to politicize what may be just a short-term consumer fad. We'll know more after another 4-6 months.

 

[ziggy29]

A lot of Treasuries have been dumped on the market over the last 18 months, and not so many corporates.

I think that's primarily a function of a market that's increasingly desperate for yield. Come to think of it, I think a lot of the market rally is due to the fact that "being safe" currently yields less than nothing when considering real world inflation.

 

[Gone4Good]

Do I hear the sounds of another credit bubble inflating?