S&P has removed the United StatesAAA highest rating, triggering turmoil in global stock markets, but it has not diminished the appeal of U.S. Treasury bonds. According to Bank of America Merrill Lynch data, U.S. Treasury bonds yielded2.8% in August, marking the best monthly performance sinceDecember 2008. This not only outperformed the overall return of the global bond market during the same period, which was1.99%, but also depressed stocks, commodities, and the U.S. dollar, making it the best-performing asset globally.
As the largest and most liquid bond market globally, coupled with the status of the U.S. dollar as an international reserve currency, U.S. Treasury bonds have become a safe haven for funds amid the downgrade turmoil, slowing U.S. economy, and concerns over the European debt crisis. The yield on the ten-year U.S. Treasury bond even hit a record low of1.97% last month on the eighteenth.
Previously, Gary Locke, the first Chinese-American ambassador to China, also revealed that the U.S. Treasury's total of$240 billion in ten-year Treasury bonds had a winning bid rate that reached a historic low, yet this did not dampen public expectations, as the bonds were quickly subscribed after issuance.
