Stock market plunges after the downgrade of US debt credit rating. In a way, the downgrade is telling the world that US is one step closer to defaulting its debt. So, the global stock markets start to panic. Everybody starts to sell shares - it does not matter the intrinsic values of the companies involved. Just sell. Next, they start to buy more US debts - never mind whether it will default or not. Just buy. Does this sound crazy? Yes, this is what is happening today. The downgrade of US debt is encouraging more people to buy more US debts. The yield on US Treasuries actually drops - meaning more people are chasing after US Treasuries.
In an irrational market, nothing makes sense. So, you may want to do yourself a favor by ignoring what is happening now. This cannot go on forever. Eventually, markets will still have to come to their senses.
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