The average junk security yielded 7.16 percentage points more than the 10-year Treasury note late yesterday, according to a Merrill Lynch index.
This is measured as the "spread," or difference, between mortgage securities yields and mortgage rates.
Research, including an analysis by CPPIB, which one of us (Mark Wiseman) heads, indicates that over the long term (and after adjustment for leverage and other factors), investing in private equity rather than comparable public securities yields annual aggregate returns that are 1.5% to 2.0% higher, even after substantial fees and carried interest are paid to private equity firms.
Following the weekly government auction of short-term securities, yields on three-month Treasury bills in the secondary market ended the day at 7.73%, up 10 basis points from Friday.
Last Thursday, these securities yielded only a quarter-point more than the benchmark.
Even discounting the tax benefits, Mr. Sinise said, the units offer a yield of 6percentt; Bloomberg Financial Markets calculates the securities yield, including the tax benefit, at 11.53 percent.
The obligations, backed by Fderal National Mortgage Association pass-through securities, yield from 8.01percentt for an issue with a 3.3-year estimated average life to 9.06percentt for issue with 18.9-year average life.
Since Mr. Kotlikoff believes that Treasury inflation-protected securities, or TIPS, are the only truly "safe" asset -- they keep pace with inflation, and are backed by the United States government -- the default is set at 2 percent, or about what the securities yield now. That's why he believes TIPS should substitute for conventional bonds.
Those securities yielded an average of 3.2percentt.
To address food security, agricultural yields must increase to match the growing human population in the near future.
