Chart of the day: Yield curve spread per asset class
During the recession there was often talk of a flight to quality. Investors would flee risky assets and go into something safe. There is much of that, however, investors are not always being pushed, they are often pulled. During the recession, we began seeing a very steep yield curve. The spread investors are as much lured by the allure of easy money with a steep yield curve as they are by the fear of risky assets.
You can see that the spread by just parking your money in treasuries from the beginning of 2008 all throughout 2009 and most of 2010, has yielded the same spread as AAA and almost BAA lending throughout much of the 90s. The point is that a 2% yield is respectable. To be able to do that with almost no credit risk, is enviable.