No flight from risk just yet

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John Authers in the FT makes the point (subscription required) that the great flight from risk that people with respect for market history have been predicting for a while now still hasn’t come to pass:

Angela Montero, of Société Générale, pointed out last week that Mexican bonds yielded 5.85 per cent. 10-year bonds in Colombia, gripped by scandal and guerrilla war, yield 6 per cent. US treasuries yield only about 5.15 per cent, but, more tellingly, New Zealand and Australian bonds yield 6.2 and 6.75 per cent respectively.

This is in local currency terms, and speculators have pushed the aussie and kiwi dollars to excessive levels. But can Mexico or Colombia really be a safer bet to repay a loan than Australia or New Zealand?

My thinking is that they can’t. But every week there seems to be another sign that the global age of easy money that has brought us these weird interest-rate relationships is about to come to an end and then … it doesn’t.