Interest rates are supposed to reflect credit-worthiness but …

Interest rates are supposed to reflect credit-worthiness of a country, thus investors should require financially weak countries to pay higher interest rates to compensate for risk.

That makes it difficult to explain why a 10-year government bond in the United States yields 2.05 percent, while 10-year bonds in France, Italy and Spain yield 0.53 percent, 1.25 percent and 1.23 percent, respectively.

And some bond rates are negative in Germany, Switzerland and Sweden.

Related Posts

  • 82
    Please visit the souce ::   Recently Jim highlighted the odd behavior of the various Treasury term premia. Here are some additional thoughts. First, from “Debt market goes off script” in the WSJ: Yields on short-term U.S. Treasury debt maturing in two to five years hit the highest level since…
    Tags: year, yields, economy
  • 79
    Follow up of my post on BIG COMPANIES NOW HAVE A HAND IN THE COLLABORATIVE ECONOMY Here is one picture.
    Tags: economy
  • 79
    The quick move higher in the yields of Europe's weakest sovereigns from historic lows may be just the beginning and on the edges it could start to affect other low-rated credits where investors have hunted for yield—such as U.S. junk bonds. Driven by speculation about the European Central Bank and…
    Tags: percent, investors, higher, bonds, yield, yields, year, bond, italy, economy
  • 79
    Tags: economy
  • 78
    Dysfunctional Bond Markets – A Comparison of Yields Below we show the 10 year government bond yields of three countries: Spain, Japan and the United States. Also shown are budget deficits and total public debt as a percentage of GDP. It would actually make more sense to look at deficits…
    Tags: bond, risk, yields, government, spain, countries, rates, yield, states, year