It isn't enough to compare the spread to its average, Mr. Fridson says, because the average doesn't reflect the current level of default risk, the strength of the economy, the yield on government bonds or the availability of credit.
Last month its five-year debentures were trading at a yield of 30 basis points over Japanese government bonds.
The yield on 10-year Government of Canada bonds followed a similar but less dramatic pattern, falling 13 basis points in the same period to 2.98%.
Until this year, ministries kept around 1 trillion escudos in bank accounts, where they earned a lower rate of interest than the yield on government bonds.
To a lot of people, the current yield on government bonds just makes no sense.
No one is sure of the total subsidy but, as a guide, BNDES lends at about 6%, well below the yield on ten-year government bonds of 12%.
In Britain shares in the FTSE 100 index trade on an historic price-earnings ratio of less than ten and yield 5%, around three-quarters of a percentage point more than government bonds.
And the dividend yield is competitive with that of certain risk-free government bonds.
Currently, their dividend yields average a little under 4%, compared with the yield of 1.6% or so on Japanese government bonds.
And limiting foreign exchange re-investments to low-yield government bonds has acted as a direct subsidy of American taxpayers and the American government, saddling China with extraordinarily low yields and creating inflationary pressures.
The yield on Italian government bonds rose sharply, implying markets are more wary of lending to Italy.
The yield on Italian 10-year government bonds - which provides an indication of the yearly interest rate Rome would have to pay to borrow new money - rose to 4.89% from 4.48%.
Many state funds are allowed to assume an investment return of 8% a year, which is barmy when government bonds yield less than 2% and dividends only a little more.
Yield ratios may not be reliable at times of lower inflation, or when the supply of government bonds shrinks.
ECONOMIST: A survey of global equity markets: Valuation waltz | The
Italy held a successful auction of five-year government bonds Monday morning at a 6.29% yield, lending some ground beneath markets, which held onto its gains from late last week and opened flat.
The pledge of aggressive buying has caused Japanese Government Bonds (JGB) to rally violently and flatten their yield curve.
But there are fears that the failure of the budget talks could harm the Netherlands' prized AAA credit rating status and the low yield on government bonds.
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