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The (non-BS) default risk of the US is very close to nil. Hence the AAA is deserved. But the currency risk and the interest rate risk is very high. Here's the pair trade if you want it:

http://finance.yahoo.com/q/bc?s=JNK&t=2y&l=on&z=...

...notice that the 20 year treasury is more volatile than junk bonds.

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You obviously don't understand the concept of duration. You are comparing 5-10yr debt to 20-30yr debt.

More apt comparison would be intermediate treasuries, much different picture (time frame also questionable for a pure comparison):

http://finance.yahoo.com/q/bc?s=JNK&t=2y&l=on&z=...

You can see some better numbers here. Of course, when I say "interest rate risk", that function involves duration.

http://etfdb.com/etf/JNK/fundamentals/ http://etfdb.com/etf/IEF/fundamentals/

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