US Bonds Have Never Been Risk-Free; Allison Schrager

Practically every financial meltdown or crisis can be traced back to a misunderstanding of which assets are “risk-free.” 

Investors think they have a risk-free asset — it could be a mortgage-backed security, shares in a Bernie Madoff fund, Greek debt — and are surprised when it turns out not to be.

For the last several years, the term has been used a lot to describe one of the most widely traded securities in the world: US Treasuries.

All of this means that US bonds may be losing some of their status as a risk-free asset. 

But make no mistake: Treasuries were never risk-free, aren’t now, and won’t be anytime soon.

Bond prices have been falling and becoming less predictable, in response to higher inflation and the realization that the US government has no serious plan or desire to reduce its debt.

The test of a risk-free asset is not low volatility in good times, or even a lower yield relative to US debt. 

It is how it performs in times of market turmoil.

Allison Schrager Bloomberg 22 april 2025 

https://www.bloomberg.com/opinion/articles/2025-04-22/us-bonds-have-never-been-risk-free-and-never-will-be


The Oxford Curriculum; Allison Schrager

https://englundmacro.blogspot.com/2024/12/the-oxford-curriculum-allison-schrager.html


US government debt is a safe haven the way Pearl Harbour was a safe haven in 1941.

Niall Ferguson, FT 10 February 2010

Bond sell-off is a foretaste of things to come

Thushka Maharaj FT 9 March 2021

https://englundmacro.blogspot.com/2021/03/bond-sell-off-is-foretaste-of-things-to.html


Tillbaka till Rolfs länktips 22 april 2025

https://englundmacro.blogspot.com/2025/04/rolfs-lanktips-22-april-2025.html



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