“Perhaps you’d like to proffer a good reason for buying a 5-year piece of paper yielding 1.5% in any currency when the 6-month equivalent in that same currency is yielding 0.76%”
One reason is there are institutions like insurance companies etc., that want to structure their maturities for constant cash flow. They are less keen on yield than on principal preservation. Think of a Japanese insurance company that simply wants a guaranteed one billion yen exactly five years from now, wants to take ZERO risk of any kind – investment or exchange rate – and DOESN’T care for return. What could it do? Put the cash in 5 year Japan treasuries and think of 1.5% return as gravy.
