Considering the US is supposedly less credit worthy today than it was last week, last quarter and last year, consider how that “fact” has played out now that treasury buyers have had a day to digest they news. Below is a chart of treasury yield curves from four dates over the last year (today, 3, 6 and 12 months ago).
We are at historically low yields (high prices) in Treasury land. Why? Well only time will tell, but last time we got here (2008), it preceded a deflationary spiral.
While S&P may be priding themselves and looking to change their name to Straight Poop, maybe they’d be better served changing their name to Small Penis.
Treasury Yield Curves from Bloomberg 8.8.11
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