USA Treasuries perceived as more Riskier than Top USA Corporate Bonds !…offering Higher Yields!

USA Treasuries and Corporate Yeilds…..Have a look at this Yield table below

Issuer

Credit Rating

Maturity

Annual Yield in %

USA Government

AAA

2012

1.18 to 1.24

Berkshire Hathaway

(Warren Buffett)

AA+

February 2012

0.89

Proctor & Gamble

AA-

August 2012

1.12

Johnson & Johnson

AAA

August 2012

1.15

For the First Time ever,the USA Treasury Yield is higher than that available on Top Corporate Bonds for similar maturity periods !

So for the risk free rate we can now stop referring to the Treasury Yield,but instead use as the proxy, the lower yield offered by Warren Buffett’s Berkshire Hathaway !

That’s an ominous warning !

Lenders Trust Top Corporates more than they do the US Government !…even though the Government enjoys a Top AAA Rating currently….When queried whether USA would lose this Top Rating of AAA,Tom Geithner,the Treasury Secretary emphasised on ABC News ” Absolutely Not !…that will never happen to this country!”…Emotional…Patriotic….but unrealistic and impractical…if US ,like it has little alternative,continues to borrow and print currency to fund it’s deficit,it will have to increase yields to tempt lenders

Clearly The Huge Spiralling National Debt and Fiscal Deficit Situation that has reached record levels of Trillions of Dollars is unnerving Lenders….This situation is more likely to escalate in coming years,rather than reverse 

The Demand for US Treasuries has ebbed at the auctions…and the Government is being forced to offer higher yields to attract subscriptions….dangerous ,but an inevitable trend setting in

This will create increasing pressure on the US Currency and lead to the US Dollar weakening…..this should inspire Gold Prices in the Years to come

Rough and Tough being an American in America these days!…going to get much rougher and tougher!

 

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