Investors also piled into Treasurys, driving down the yield on the benchmark 10-year note sharply to 2.804%, its lowest close since last November. Yields, which fall as prices rise, cratered as investors searched for a safe haven ahead of the Aug. 2 debt-ceiling deadline.
All three major credit-rating firms have warned they could lower the top-notch rating of U.S. debt if the borrowing limit isn’t raised.
From the Rich White Motherfucker Journal.
So let me see if I’ve got this straight. We’ve got to slash spending immediately because (1) if we don’t, the debt ceiling can’t be raised, and if the debt ceiling isn’t raised, then the US will default on its Treasury bonds, and (2) if we don’t cut spending then the rating agencies will downgrade Treasury bonds, thus instantly making them worth less. And because of all this, investors “piling into Treasurys”, because they perceive them as a “safe haven”.