Sounds like a great deal! How many trillions are the banks borrowing for this arb?
As far as risk free, you obviously don't understand interest rate risk. Or yield curve risk.
I very much understand interest rate risk and yield curve risk.
The article with the link I’m providing below speaks to the sweet deal the banks are getting. One particular salient quote:
“The Fed’s low-rate policy “has been a plan to buy time for the banks to take free money and invest it, and make some kind of spread, and work their way out of the hole they were in,” said Mark MacQueen, a partner and money manager in Austin, Texas, at Sage Advisory Services Ltd., which oversees $10 billion, in a telephone interview on March 6. “Banks are trying to clean up and improve the appearance of their balance sheets and buying Treasuries accomplishes this.”
This is a rigged game with the big boys on Wall Street still being protected by the government and the taxpayer with the Fed keeping interest rates low. Meanwhile the average seasoned citizen who saved for 40 years gets 1% on CD’s. At current artificially depressed rates where’s the risk premium for the Main Street investor?