Markets and governments around the world are trying to come to terms with the downgrade of U.S. treasury bonds. The bonds have served as the benchmark security for financial markets, and with this first ever downgrade of T-bills, financial markets are entering uncharted waters.
For example, banks and hedge funds commonly offer U.S. treasury bonds as collateral for the short term loans they rely on for day to day operations. Some analysts worry that lenders might now ask for more collateral, driving up operating costs for many businesses.
- Wall Street Journal: U.S. Stock Futures Pummeled After U.S. Debt Downgraded
- Bloomberg: Stick With U.S. Stocks After Rating Downgrade, Barclays’s Olsen Says
This segment aired on August 8, 2011.