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Why are agencies as good as treasuries.

They are almost as good as treasuries. They are AAA rated and offered by a government agency. While they are not strictly guaranteed by the US government, it's highly unlikely they would default or if there is a problem, you'd hear about it and have time to adjust. For this slight additional risk, you can pick up anywhere from 25-150 bps over treasuries/T-bills, depending on the maturity of the bond.

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