Treasury Bond Prices Up Despite Downgrade
Fresh from Downgrade, Treasuries Rally
The market relevance of S&P’s stripping of the U.S.’s AAA rating is plain in the rise in price and fall in yields on U.S. Treasury securities. That is, nil.
The benchmark 10-year note yield is back below 2.5%, down 10 basis points from Friday at 2.46%, as investors continue to seek U.S. government securities as the safest haven in a turbulent world, notwithstanding S&P’s protestations. At the same time, the two-year note yield is at ‘two bits’ again, or 0.25%, down four basis points. And the long end, which did sell off initially Sunday evening, has come roaring back with the 30-year bond yield off seven basis points, at 3.77%.
While the politicians expend a lot of hot air blaming each other, the bond markets aren’t even blinking at the downgrade. Treasuries are still seen as the safest place to put your money when the bears come out to play.