Who's Selling the Safest Bonds?

You might be wondering, after looking at the numerous disasters in both the stock market and bond markets, where are the safest paper issues?

Of course, what's safe today could be a complete disaster tomorrow, but for right now the edge has got to go to the Asia-Pacific market.

See, when the European Union announced its big plan to help bail out Greece (parts of which might well still be on fire), that pretty much got the attention of the bond investors. Specifically, it was like sticking a gigantic sign on their markets that read "Take your business elsewhere.". And indeed, that's what they did. In spades.

In fact, the Markit iTraxx Asia index--an index measuring credit-default swaps--had its biggest one-day drop since May of last year for both Singapore and Australia. Japanese ratings fell the most in five months.

So basically, three of the safest bond issues right now are Singaporean, Australian and Japanese. I'm personally surprised by that last one as I'd heard horrible things about Japan's debt pool--last I'd heard it was running somewhere around two hundred percent of GDP, which is huge by most any standard. It helps that most of Japan's debt is held by Japanese citizens, who are notorious savers, but that's more of a cold comfort than anything else.

What's left after this? Well, you may think it's a good idea to move into extremely low-risk debt issues, and if you're looking to buy bonds to stash your savings, it may be the best idea you're going to get for a while.