Italian and Greek bonds now have lower yields/rates (i.e., considered lower risk(?)) than US bonds:
> James Bilson, global fixed income strategist at Schroders, said fiscal policy and debt sustainability are crucial for bond markets and the current rise in U.S. yields is not yet a sign of increasing sovereign credit risk.
> The cost of insuring U.S. sovereign debt against the risk of default, as reflected by credit default swaps, has fallen to its lowest since February, for example.
> "Combined policy is too loose to deliver sustained 2% inflation," he said. "This, in one line, is the root cause of the current weakness in bonds. Solve inflation, and many other problems become much easier too."
I've been not-reading articles since the early days of Slashdot.
That's not what rates indicate. its one component, but its far from a straight line from higher rates to more risk.
You can't really compare bonds that pay in different currencies by Rate alone.
Also governments can influence demand, e.g. by mandating banks or pension funds buy their bonds, thereby pushing yields down, without changing the risk of default.
It's not how it works. If both currency maintain change parity over time, then the inflation rate in one country compared to the other is irrelevant. “Real” (inflation adjusted) numbers make sense for consumers and local governments, but from an investing standpoint, the only thing that matters is the variation on FX rate.
And unlike what the myth of “inflation is the loss of value of a currency” says, those are actually very loosely correlated (and it tends to be anti correlated during inflation spikes due to central banks' interests rates).
That's a fair question if you aren't int he industry. Inflation would be the best example of why you can't do that.
Would you rather have a Zimbabwe bond that pays 10%(when they had 10,000% inflation a year) or a US bond that pays 5%
Tech in particular has an awful lot of churn. There's isn't a single tech company in the world that I'm highly confident will be reliably printing money 34 years from now.