The first-ever credit downgrade of the U.S. left Wall Street and Washington struggling to come to grips with a new world order, according to the Wall St Journal.
With the U.S. stripped by Standard & Poor's of its triple-A credit rating, big banks brought in people to staff trading desks over the weekend, and Obama administration officials put a full-court press on skittish investors. Treasury Secretary Timothy Geithner—who agreed to stay through the 2012 election—told NBC News that "S&P has shown really terrible judgment."
Finance ministers and central-bank governors from the Group of Seven leading economies convened a Sunday conference call to address Europe's escalating debt problems, as well as the ratings downgrade. The G-7 after the call affirmed members' commitment to "taking coordinated action where needed, to ensuring liquidity, and to supporting financial-market functioning, financial stability and economic growth."
Asian markets opened lower and worsened by midday as investors assessed the impact of the downgrade. In Tokyo, the Nikkei Stock Average fell 2.1%, and markets in China, Hong Kong, South Korea and Australia also declined. The dollar fell against the Japanese yen and the euro.
The 10-year Treasury yield fell slightly, to 2.55% from Friday's New York close of 2.563%, while the yield on two-year Treasurys fell to 0.272% from 0.292% late Friday. That stability was in contrast to predictions from some analysts of a much more aggressive market response....
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