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11:23 AM
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US Treasuries Get the Last Laugh?

In New York, they say not to get too upset if you miss your train. Just wait a bit and another will come. The same can be said about theories on the US economy.

Although Standard & Poors' downgrade of the US credit rating from AAA to AA+ didn't tell us anything we didn't know already -- the US has too much debt, isn't taking in enough revenue, the political class is moving to slow to address these problems -- people are reacting as if this is truly news. Deep down we all knew these facts and the jaded among us wondered what took the credit rating agency so long.

The markets dropped overnight and the US exchanges are shuddering -- the Dow, for example, dropped more than 300 points and people are hoping it recovers somewhat by lunchtime. President Obama is set to address the nation at 1pm and you can bet that every news station will have a split screen of the President's face and the electronic board of the Dow Jones Industrial Average. Well, maybe not MSNBC.

But where are people pushing their money to? According to experts, money is flowing to gold, that old standby which is now $1,700 an ounce, and US treasuries.

What the what? A mere three weeks ago people worried that US Treasuries would be worthless if the US Congress didn't grapple with the debt ceiling. If the US defaulted on its loans, we quaked with worry, then the US bonds and security notes would be as useful as those old AOL disks and CD-ROMS we used to trip over in the late 1990s. Fast-forward to this morning and it's a different tune. Now as markets melt and Europe swoons where are investors pouring their money?

Yup: Into the USA.

Stick around. This tune might change but it shows where investors feel safe and sound -- for the moment. Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio

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