The Government Bond Market
Janet in Wonderland Anyone who believes that financial markets are rational is not looking at the current government bond markets. The U.S. 10-year government bond is paying around 2.5%. Believe it or not, the 10-year Spanish government bond is paying less. The German 10-year government bond is paying a little over 1%, less than a 2-year U.S. bond. If you were not a finance major, skip this paragraph. The yield curve is incredibly flat. It is only this way because the Fed hasn’t realized yet the Great Recession has been over for five years. More sinister explanations rely on conspiracy theories. When given the choice, I always go with stupidity. According to CNBC (yes, I’m still addicted to my financial soap opera), the interest rates on German and Spanish 10-year bonds are at a 200-year low. I don’t know how they know that. Germany didn’t exist 200 years ago but Prussian war bonds probably did. ...