Junk Bonds Are Back!

Interest rates have been falling once again. The yield on the 10-year U.S. Treasury, which acts as a global benchmark of sorts, dipped as low as 2.44 percent last week, which is well below where rates began the year—and lower than at most points throughout the 20th century and into the first decade of the 21st.* At no point between 1961 and 2011 were rates as low as they are now, and for most of that time, the yield on the 10-year was above 6 percent.

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The Most Important Lesson the Fed Taught the World This Week

So the Federal Reserve did not taper after all. Having signaled in May and June that the central bank was likely to pare back its monthly purchases of $85 billion in mortgage and Treasury bonds, the bank and its chairman Ben Bernanke essentially said “Never mind,” and decided that now was not the time after all.

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Obama and the GOP's Risky Gamesmanship Over Debt Ceiling Could Spur Another Credit Crisis

It’s official: the United States government is overdrawn on its debt limit of $14.294 trillion as of yesterday. Well, not technically overdrawn, as the U.S. Treasury directed by Secretary Timothy Geithner has taken a variety of measures to forestall any actual federal defaults on its operations—which range from keeping the lights on at the Smithsonian to maintaining combat forces in Afghanistan. These accounting sleights-of-hand will delay any actual defaults to early August. But still, after months of inconclusive wrangling by both parties, a new Rubicon has been crossed.

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