In a fascinating piece of recent economic research, two analysts at the Cleveland Fed ask why U.S. bond yields are falling when the interest rates of European sovereigns facing similar debt issues are soaring. The research brings ample data to support the idea that current debt and deficit trends could qualify the U.S. for honorary membership in the PIIGS group of countries. Yet the spread in 10-year-bond yields between the U.S. on the one hand, and Spain and Italy on the other, has only widened as 2011 has progressed. Why? There are several possibilities. First, the U.S. banking sector represents a smaller potential liability. The U.S. also has a larger base of bond investors and acts as a “safe haven” for many troubled European sovereign bonds, which could help the bond market to stay afloat.