Not All US Treasuries Are ‘Truly Safe,’ Dallas Fed Paper Says
This article is for subscribers only.
US Treasuries are seen globally as the world’s favored haven asset. Yet it’s short maturities that best fit that definition, according to a Federal Reserve Bank of Dallas paper.
“Not all Treasury securities are equally safe,” according to the paper published Tuesday by economist J. Scott Davis. “Long-term Treasury bonds may have no default risk, but they have liquidity risk and interest-rate risk — when selling the bond prior to maturity, the sales price is sometimes uncertain, especially in times financial market stress.”