As the US Congress commits the taxpayer to a massive increase in government spending and debt, the first cracks appear in the US's credit rating.
There is so much US debt in the system - and more to come - that corporates yield less than US Treasuries.
* * * * * J B K * * * * *
San Francisco
March 22 (Bloomberg) -- The bond market is saying that it's safer to lend to Warren Buffett than Barack Obama.
Two-year notes sold by the billionaire's Berkshire Hathaway Inc. in February yield 3.5 basis points less than Treasuries of similar maturity, according to data compiled by Bloomberg. Procter & Gamble Co., Johnson & Johnson and Lowe's Cos. debt also traded at lower yields in recent weeks, a situation former Lehman Brothers Holdings Inc. chief fixed-income strategist Jack Malvey calls an "exceedingly rare" event in the history of the bond market.
The $2.59 trillion of Treasury Department sales since the start of 2009 have created a glut as the budget deficit swelled to a post-World War II-record 10 percent of the economy and raised concerns whether the U.S. deserves its AAA credit rating. The increased borrowing may also undermine the first-quarter rally in Treasuries as the economy improves.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ayK1N3ffXarY&pos=2
