govt treasuries are surging today... oh the irony

[scheming daemons]

S&P downgrades US credit rating... and the result?

Investors are moving their money out of equities and into US govt treasuries!

They're moving their money into the exact thing that was downgraded!

Somebody explain that.

[jpak]

1. Investors know S&P sucks and that treasuries are the still the safest thing going

yup

[animato]

10. +1 plus there is no safer choice LOL

[closeupready]

14. Yup.

We have a winner, folks.

[C_U_L8R]

2. and the big losers are...

all those right winging 'job creators' that suddenly see their companies devaluated.
Nice going Tea Party.

How about some left-winging hostile takeovers??

[AnnaLee]

4. I'm still trying to figure out what the backers want.

I'm talking about the Tea Party backers. The only thing I can think of is, well actually two things, either they are trying to kill the entitlements or they are trying to plunge the US into a depression that they can rebuild from having eliminated their domestic debts.

[rdking647]

3. i dont understand

buying treasures at 2.3% when you can get 7-9% or more from some US stocks that are doing fine with little economic risk. But back in 2008 some of those same companies were paying 20%... but the way I look at it,all Im doing is buying some stuff at fire sale prices and increasing my yearly income.

[Sal Minella]

5. Explanation as requested:

Larry Summers (former Treasury Secretary) was on National Public Radio this morning and he said:

===============================
S&P is saying, Sell U.S. Treasury bonds.
Warren Buffet is saying, Buy U.S. Treasury bonds.
Who are you going to believe?
================================

[tjwash]

7. Oh yeah...by all means believe S&P

:eyes:

The major criminal players on wall street, who AAA rated mortgage backed security bundles so that they could dump them off to Europe and China (referring to them as "toxic assets" no less), before they went all to hell. They are the motherfuckers who CAUSED this mess.

This cabal should all be doing time in prison, not attempting to dictate economic policy.

[animato]

11. +1 cabal is right

[lonestarlib]

13. Interesting since I just saw that S&P has put Berkshire

Hathaway on negative watch.

[Sal Minella]

16. Big surprise, eh?

With Warren Buffet saying bad things about S&P, what do you expect?

Can you really at this point give a liquid shit about anything S&P says or thinks??? With McGraw donating to the Romney campaign, and Whatsizname (?Beers?) being interviewed on Fox "news?"

[Xicano]

18. Who am I going to believe? Equally neither one of them.

S&P has lost credibility with me and Warren Buffet? Well he has pumped and dumped before.

Instead I'll stick to the knowledge of the dollar is done and no amount of shuffling chairs around on the deck is going to change that.




In this graph, the increase you see starting at the end of 2008 is from the FED shuffling chairs around on the deck (FED infusion). Notice it didn't work. The boat is still sinking.

[originalpckelly]

20. It has nothing at all to do with that.

Investors moved massive amounts of money out of equities today into safer bets, like treasuries which even downgraded are very safe, and gold.

That's the reason why. In a normal situation where we weren't having yet another crash, this would not have happened, and it is very likely that interest rates would have increased today.

[tjwash]

6. No Irony... the EURO is in even worse shape than the US dollar

And the Yuan has been poised to stagflate any time, due to being pegged too low for too long, simply so that china can undercut export prices to the US.

[Yavin4]

8. Automatic Triggers and Programmed Trading

Whenever the market dips at certain percentage, many trades are programmed into comupters to dump the stock and buy treasuries.

[pansypoo53219]

9. higher interest rates?

cause RIGHT NOW, they are ridiculously low. THANKS GREENSPAN.

[Poll_Blind]

12. I don't think this would mean higher interest rates.

PB

[originalpckelly]

21. When there is more demand for treasuries, there are lower interest rates...

not higher ones, because it means more people want to buy the debt.

[chill_wind]

15. Not news, it wouldn't seem.

Investors Made a Fortune on Treasuries in July Bloomberg

By John Detrixhe - Aug 2, 2011 8:45 PM ET
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1649883


For all the anxiety among politicians and their constituents over playing chicken with the debt ceiling and the prospect of the first-ever downgrade of U.S. debt, the people with the most at stake made more money buying Treasury securities in July than any month this year. Actually, they made a fortune, or $183,000 for every $10 million invested.

While an increase in the borrowing limit averts a default, it may not be enough to save the U.S.’s top AAA credit rating. Bond yields show investors are also concerned that the reduction in outlays by the government will weigh on growth at a time when reports on everything from manufacturing to jobs show the economy is weakening.

“Regardless of the rating, Treasuries are going to be seen as the safe haven,” said Matthew Freund, a senior vice president at USAA Investment Management Co. in San Antonio, where he helps oversee about $50 billion in mutual fund assets. “The U.S. remains one of the strongest, most dynamic economies in the world.”

http://www.bloomberg.com/news/2011-08-02/obama-bonds-proved-world-beaters-as-congress-played-chicken-with-u-s-debt.html

That was the view, despite the anticipation of a downgrade.

[Xicano]

17. That would be the FED buying treasuries causing that surge

We just raised the debt ceiling. Or another way to put it we just issued ourselves another credit card. Now we're using that new credit card to pay on the previous credit cards. In other words its just kicking the can further down the road and making the pain later even greater.

[originalpckelly]

19. Explanation: They are so afraid they'd even invest in something that would usually be down today.

Down meaning up, in this case, as the interest rates would usually increase after such news.