No. of Recommendations: 12
Have investors thought through the implications?
Perhaps so.
The yield on 10 year inflation protected US government bonds is about 1.77%.
The average of the yields of the equivalent products from Canada, the UK, Germany, France and Italy is about 1.37%. One could interpret the gap as some unknown mix of the expectation of a weaker currency and the expectation of dodgier inflation data.
And the relative likelihood of default, of course---the US can't be in a position that it must default, but could be in a position that it defaults anyway.
Jim
