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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Treasuries are amazing. The US government bond market is so big, liquid, safe and widely-acceptable as quasi-money that it commands something that economists call a “convenience yield”.
In reality, it functions more like a premium — the real-world, semi-measurable manifestation of what is often otherwise referred to as America’s “exorbitant privilege”.
Treasuries are just so darn attractive to hold and easy to use for a wide variety of purposes that the US government can actually borrow more cheaply than even the genuine risk-free rate.
A few years ago the NY Fed estimated the savings at ca 20-40 basis points a year, or ca $35bn a year over the past two decades. Since 2020 it has amounted to about $70bn. Which may seem piddling in the context of a $28.6tn market, but still amounts to more than three…
