The 10-year Japanese Government Bond (JGB) yields 0.01%, while U.S. Treasury’s similar issuance yields 0.72%. It...

The 10-year Japanese Government Bond (JGB) yields 0.01%, while U.S. Treasury’s similar issuance yields 0.72%. It seems like the investors like the JGB so much that they are willing to accept close-to-zero interests when lending to the Japanese Government. Both the U.S. Treasury Department and the Japanese Government borrow in the currency they print. Why is the case that only the U.S. Treasuries are considered as the risk-free assets?

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Expert Solution

US treasuries are considered risk free asset because

Bonds , notes and treasury bills issued by US government are considered risk free asset because ‘full faith and credit’ of US government back them.

their is virtually zero risk that you loose principal or interest in US treasuries.

jeff jeffy answered 1 year ago

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