Who's afraid of a little 'ol credit downgrade on the sovereign debt of the United States?


The majority of investors in the global credit markets seem to have completely shrugged the whole thing off. Foreign and domestic investors alike proved willing to be aggressive buyers of Uncle Sam's 10-year notes at yesterday's Treasury auction. Buying demand was strong enough to push the yield on these securities down to a decade-long low of 2.092%.


The Treasury Department will complete this week's regularly scheduled three-part debt sale this afternoon when they auction off $16 billion worth of 30-year bonds. I suspect demand for today's offering may not be as robust as it was for Tuesday's 3-year notes and yesterday's 10-year notes. If this morning's 200+ point rally for the Dow Jones Industrial Average is sustained through the conclusion of the Treasury auction at 1:00 p.m. ET - it is likely the yield on the 30-year Treasury bond will edge fractionally higher - a condition almost sure to cause mortgage interest rates to creep fractionally higher as well.


The Labor Department reported earlier this morning the number of Americans claiming new jobless benefits dropped 7,000 to a seasonally adjusted 395,000 - the lowest level for this measure of activity in the job market in more than four months. While still elevated, the level of weekly claims for government funded unemployment benefits has improved markedly since hitting a peak of 478,000 during the last week of April. Hiring remains exceptionally weak by historical standards for this stage of the economic recovery. Economists generally agree the U.S. needs to add at least 125,000 jobs a month just to keep up with the growth of the labor force - and double that amount to make a significant dent in the nation's 9.1% unemployment rate.