bsrsharma, tomorrow morning you can buy many billions of dollars worth of 3-month treasury bills yielding 5.04%, all backed by the US Treasury. How’s that for preservation of principal and practicality? For that matter, if you just love the yen you can purchase many billions of dollars of 6-month Japanese bills yielding 0.76% backed by the Japanese Treasury. That’s just 74-ish basis points less than the 5 year is yielding. Who in their right mind would trade 74 basis points for 4.5 years in maturity (and its attendant duration) risk?
Again, I reiterate… buying an asset – even one backed by the taxing authority of an industrial nation (such as Japan) – that yields 1.5% with a maturity of 5 years is just plain nutso… and even more so when you can get 0.76% investing for just 6 months. Blips for Nips…
