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Author: galagan Big gold star, 5000 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35387  
Subject: Re: Yield-Math Madness Date: 6/21/2006 10:51 AM
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What prompted my remark about the market being worried was seeing the big jump this week made by the yield reported for the 6-moth's T-Bill compared to last week.

Guys, you're overreacting. The jump in the 26-week reflects much-changed expectations in the fed-futures market that we'll see 50 bp of hikes by August. Since the majority of the 26 weeks will be after August, the yield should incorporate relatively more of the 5.5% expected yield on fed funds.

The US never should have to default since it can just create more money to pay you off. On the other hand, if they did decide to default, you'd have a lot bigger concerns than how you're gonna fund your Roth next year.

Is it because the market is taking a dim view of their credit quality?

I think spreads have been tight for the opposite reason - that the market takes a positive view of the credit quality of the corporate and other non-government bonds, so it doesn't require such a big spread.

dan
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