Treasuries soared Wednesdat as downgrades by S&P
Ratings of some bond insurers reignited fears of tighter liquidity amid less willingness by banks to lend, and lower risk appetite among investors. 10-year note rallied 22/32 to 101-24/32 for a yield of 4.03%. 30-year bond surged 43/32 to 108-28/32 for a yield of 4.45%. The S&P downgrades overshadowed sentiment that
deterioration in the credit markets was not as bad as expected after the Federal Reserve's auction of $20B in 28-day credit was awarded at a rate of 4.65%. This was closer to the federal funds rate of 4.75% than the discount rate of 4.25%, suggesting financial insitutions were in good enough shape to accept a relatively higher rate. Major stock indexes were mixed in the afternoon. Crude oil and gold futures edged down.