10-year treasuries are at 2.58% right now.

[BlueCheese]

This is near their yearly low. They were at 3.36% at the start of the year. (I'm not a finance expert, but this seems to be the rate everyone looks at.)

Is that an indication that investors are worried we can't pay our bills? If anything, they see the US as a safer place to hang out while the eurozone is struggling.

S&P may want to make political statements about austerity, but that doesn't mean we have to listen. Anyone who remembers the rating agencies pathetic performance during the housing slump should know better than to pay too much attention to these folks.

[Renew Deal]

1. I expect very vocal questioning of S&P's legitimacy coming.

I think the US will treat them very harshly.

[BlueCheese]

3. I could understand looking at their advice...

... when it comes to less well-known securities. Like maybe some random company's bonds or weird mortgage-backed securities (ha ha). But what extra information could they possibly have about treasuries? These must be the most closely examined and understood securities in the world.

[flamingdem]

7. They are toast after making a 2 trillion mistake in their math! nt

[defendandprotect]

2. hmmm... seems we had to pay an additional 1/2% to cover $120 BILLION in tax cut extensions ....

On Treasury Bills --

At least that's what Hartmann said last week --

We borrowed $1.8 TRILLION -- total --


As I understood it --

[customerserviceguy]

4. Well said

I sure wouldn't want to lock in my money for ten years at that paltry rate. If the economy either gets going again, or we have stagflation, I'll be able to do way better than that in the long run.

[rdking647]

5. japan

has a AA- rating.. and their 10 yr bonds are 1.01%

show you how much people actually care about credit ratings

[pa28]

8. That one word says it all. In the end bond markets will decide.

Trying to outsmart them is usually a mistake so I'll just wait and see.

[A HERETIC I AM]

6. "Is that an indication that investors are worried we can't pay our bills? "

No, it's an indication of higher demand for that paper.

Yield and bond prices move inversely. When yield is down, the price of the bond has been bid up. Since those prices are essentially set by supply and demand, higher bond prices mean there is more demand for these securities.

If there was no confidence in these notes, holders would be selling them and their price would plummet. That would run the yield up and it would get up to the point that they were once again attractive, and buyers would flood back into them.

As it is, there hasn't been a big swing either way in recent weeks, and as you noted, yields are near their YTD low.

One should bear in mind that all this activity is in the secondary market. When the NY Federal Reserve conducts auctions on behalf of the US Treasury, the coupon rates for notes and bonds (those securities with longer than 2 year maturities and those that pay bi-annual interest payments) are set and the amount of interest the Treasury pays is unaffected by subsequent trading and changes in yields.