Corporate Bonds more Attractive than U.S. Treasury

To follow up with our recent post on bond yields, here is another story emphasizing the point.

http://www.bloomberg.com/apps/news?pid=20601010&sid=aYUeBnitz7nU

This Bloomberg story shows several instances where high quality corporations have recently issued debt with yields just a few basis points shy of a similar-duration US Treasury. What does this mean?

It means that investors would much rather put their faith in a high quality company's ability to pay its debts than in the U.S. government (with its endless money-creation and ability to tax).

Rumor has it that the USA is about to lose its AAA credit rating, and get bumped to AA. It's about time, and the "market" for US bonds (i.e. China, India, Japan) is sending a wakeup call to our leaders in the USA to right the ship and become sensible in our financial dealings. If we don't, it is very likely that US bond yields will continue to rise in anticipation of a bond market that requires a higher rate of return for the risk.