Crumbling haven

15 Mar 2011 By Agnes Crane

Investors are snapping them up as they flee riskier assets in the wake of Japan’s triple disaster, not to mention strife in the Middle East. That gives Washington an otherwise undeserved break on borrowing costs. But the U.S. safe harbor needs major repair if it’s going to last.

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Investors fled risky assets on March 15 and bought U.S. Treasuries and other sovereign debt from the developed world as fears of a nuclear disaster in Japan deepened. Since the March 11 earthquake, the twoyear Treasury yield has fallen 10 basis points by midmorning on March 15, or 15 percent, while Canadian and German twoyear bond yields have dropped 11 percent and 9 percent, respectively.

Gold, usually another perceived safe harbor for nervous investors, has fallen roughly 2 percent since last week.

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