It’s dark out there these days. Not just because it’s winter and the days are shorter, but because it’s getting harder to look around and find economic bright spots. China’s been slowing down for a while, Russia’s falling apart and now Europe is dealing with deflation. But—oh!—What’s that? What is that distant star shining so brightly, beckoning the world’s fearful funds? Why, it’s Uncle Sam and the US Treasury market!
A lot of the other safety-blanket investments out there aren’t looking as comforting as usual. RBS has completely written off the market for Japanese government bonds, and German bunds are yielding next to nothing. In fact, the two-year schatz (paywall) is yielding less than nothing. So investors are ignoring a widely expected 2015 rate hike by the Federal Reserve to take a bit of shelter in the storm.