But see Los Angeles Times, "No rush from U.S. Treasuries, as yields fall while Asian stocks slump":
U.S. Treasury bonds' status as a haven seemed intact in Asia on Monday, as yields fell despite Standard & Poor's downgrading of Uncle Sam's credit rating on Friday.More at that link above, and see, "What the U.S. debt-rating cut may mean for markets":
It may have helped Treasuries that Asian stocks were broadly lower, as some investors bailed out ahead of European and U.S. equity trading.
The 10-year Treasury note yield slid to 2.50% in late Asian trading, down from 2.56% on Friday.
Shorter-term yields also fell. The two-year T-note dropped to a record low 0.26% from 0.29%.
If investors dump Treasuries, where would the money go?RELATED: At CNBC, "No Chance of Default, US Can Print Money: Greenspan" (via Memeorandum).
They don’t have a lot of options if they want to keep their money in something relatively safe.
The bond markets of other countries still rated AAA -- including Germany, Canada, France, Finland and Australia -- are far smaller than the U.S. debt market. The appeal of Treasuries in part is their great liquidity, meaning it's easy for investors to instantly buy or sell bonds.
What’s more, Europe has its own worries: The continent’s government-debt crisis has worsened in recent weeks, with investors now fearing that Spain and Italy could be forced to seek European Union bailouts, following the paths of Greece, Ireland and Portugal over the last 15 months.
Some investors are likely to run to gold, another classic haven. Gold has been streaking this year, rising 16% year-to-date through Friday, to $1,648.80 an ounce.
Haven’t Treasury interest rates been falling lately, anyway?
Yes. Investors have been pouring cash into Treasury securities since mid-April, driving interest rates down, as global economic growth has faded. The rate on the 10-year Treasury note, a benchmark for mortgage rates and other long-term interest rates, fell as low as 2.40% last week from 3.59% in mid-April.
Because worries about the economy have only worsened in recent weeks, many analysts believe that any jump in Treasury rates related to S&P’s downgrade could quickly bring a torrent of buyers into the market, happy to snag higher yields.
“The fundamentals of U.S. and global growth are weakening, and that’s a fertile time to be in Treasuries” as a haven, said William O’Donnell, head of Treasury-bond strategy at RBS Securities.