Treasurys showed on Monday that they are still the safe-haven investment of choice in time of stress, with investors piling into the same U.S. government debt that was downgraded last week by Standard & Poor's. The Wall St Journal writes that rather than sparking a selloff in Treasurys, S&P's action—lowering the U.S.'s triple-A credit rating one notch to double-A-plus—added to fears about the global economic outlook and resulted in a broad-based selloff in risky assets. The Dow Jones Industrial Average stock index plunging by 5.5% in a flight into the perceived safety of Treasurys and gold.
The buying sent Treasury yields, which move inversely to prices, tumbling to fresh landmark lows. The two-year note's yield fell to a fresh record low of 0.228%; the benchmark 10-year note's yield dipped to as low as 2.309%, the weakest level since January 2009. The yield has fallen from this year's peak of 3.77% in February and is now trading near the record low of 2.034% hit in mid-December 2008 after the collapse of Lehman Brothers.
"It is not about yields," said Thomas Roth, executive director in the U.S. government-bond-trading group at Mitsubishi UFJ Securities (USA) Inc. in New York. "People are buying Treasurys because they are afraid to be in anything risky. They will take Treasurys at whatever yield they can get…."
Find out more at http://online.wsj.com/article/SB10001424053111904140604576495930871375572.html?mod=WSJ_Markets_LEFTTopStories
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