Going Concern:
bcbunker1:
so what happens to treasury rates? higher because of credit risk or lower because everyone flocks to USTs as a flight to quality?

UST just got downgraded bro...rates are gonna skyrocket on Monday as people dump their treasury holdings

Yeah your right but what happens when the markets begin to tumble again on monday? People will quickly turn around and begin to buy treasuries just to stay clear of the falling knife. This will happen regardless of the credit rating cause lets face the facts where else are you going to park your money, in Liechtenstein bonds?)

 
Best Response
Freshcut:
Going Concern:
bcbunker1:
so what happens to treasury rates? higher because of credit risk or lower because everyone flocks to USTs as a flight to quality?

UST just got downgraded bro...rates are gonna skyrocket on Monday as people dump their treasury holdings

Yeah your right but what happens when the markets begin to tumble again on monday? People will quickly turn around and begin to buy treasuries just to stay clear of the falling knife. This will happen regardless of the credit rating cause lets face the facts where else are you going to park your money, in Liechtenstein bonds?)

As Bill Gross is probably singing right now...."O Canada our home native land"...

 
Freshcut:
<span class=keyword_link><a href=/resources/skills/finance/going-concern>Going Concern</a></span>:
bcbunker1:
so what happens to treasury rates? higher because of credit risk or lower because everyone flocks to USTs as a flight to quality?

UST just got downgraded bro...rates are gonna skyrocket on Monday as people dump their treasury holdings

Yeah your right but what happens when the markets begin to tumble again on monday? People will quickly turn around and begin to buy treasuries just to stay clear of the falling knife. This will happen regardless of the credit rating cause lets face the facts where else are you going to park your money, in Liechtenstein bonds?)

I think investors will flock to non-US investments, cash markets, Gold, etc.

 
IamObama:
bcbunker1:
so what happens to treasury rates? higher because of credit risk or lower because everyone flocks to USTs as a flight to quality?

Do you realize how many funds and companies world wide use Treasuries as collateral because they are required to use AAA rated securities? What do you think is about to happen

Yeah but most of them will still be able to hold onto their treasuries due to the fact that only one rating agency has downgraded. Now if the others step in and follow suit then we may have a bigger problem.

 

they will work around the AA collateral issue somehow

yields are so fing low right now because lets face it UST is the best alternative to all the other shittier assets out there. i doubt this will really have an impact other than to hopefully shake some of the complacency in washington

yields were like 8%+ in the 80s and it wasnt the end of the world the govt just needs to lift some of this uncertainty so we can all get on with being masters of the universe

 

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Reality hits you hard, bro...

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