This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Investors Like T-Bills Despite Downgrade

NEW YORK ( TheStreet) -- Despite Standard & Poor's downgrade of U.S. debt from triple-A to double-A status, faith in T-bills is still strong.

Uncertainty in the health of the global economy has rattled investors, heightening the attractiveness of Treasuries as a safe haven asset. The benchmark 10-year note was last rising 25/32, diluting the yields to as low as 2.48% in early Monday trading.

The market had been anticipating the move by Standard & Poor's before the ratings agency made its downgrade announcement late Friday. Many analysts are noting that the decision does not make a fundamental different to how investors view Treasuries.

"The downgrade was not really new information," says Priya Misra, fixed income strategist at Bank of America. Ultimately, demand for Treasuries remains strong as we are in a risk-off environment, she explained.

"The downgrade was really just one more straw in a slew of information and events that indicate a weakened economy," said Alan de Rose, Treasury trader at Oppenheimer. "The market has broken into lower yields and will try to find a trading range there. In the absence of economic strength, yields will probably stay there."

Investor Warren Buffett has said that he would continue to buy Treasuries even at zero-percent interest rates. "I don't like it, but we'll do it," said Buffett on CNBC Monday morning.

Misra at Bank of America says she expects demand for 10- and 30-year notes to ease as the debate in Washington on how to deal with the U.S. deficit in the long term plays out.

"In the longer term, people have options to diversify away from the dollar, which will steepen the yield curve," she added.

Rating agencies Moody's and Fitch Ratings are expected to decide whether or not they also will downgrade U.S. debt. Their choice depends heavily on how a newly created bipartisan committee in Washington will address the nation's long term fiscal problems. Misra says that while further downgrades are likely, they will not be met with as much of a shock reaction as seen in markets this time around.

-- Written by Chao Deng in New York.

>To contact the writer of this article, click here: Chao Deng.

Readers Also Like:


Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,171.82 -107.92 -0.62%
S&P 500 1,994.57 -15.83 -0.79%
NASDAQ 4,525.5750 -54.2140 -1.18%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs