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U.S. Stocks Fall On Downgrade Of U.S. Credit

RENEE MONTANGE, Host:

And what exactly is happening with U.S. markets?

TAMARA KEITH: But, you know, it's worth noting here that we focus a lot on the markets, but the markets are not the economy. They're just one measure of how investors are feeling.

MONTAGNE: Well, let's look at another one of those measures, U.S. Treasuries. One might assume that if the credit rating of the U.S. took a hit, investors would be running away from U.S. debt. But that's not the case.

KEITH: No. Call it counterintuitive, but at the moment, the 10-year Treasury is below where it closed on Friday. And when yields go down, that means demand is up. Interest rates for things like mortgages are tied to treasuries. So the fact that investors are not fleeing is a good sign for consumers - at least so far. But, of course, it is very early.

MONTANGE: Why would investor still treasuries as a safe bet - if, in fact, that's what this is saying?

KEITH: So, as one investor put it, we used to be the cleanest shirt in the drawer. We're still the cleanest shirt in the drawer. We're just a little dirty.

MONTAGNE: And there's been a lot of a talk about possible other fallout from this downgrade by S&P. Have we seen any of these ripple effects yet?

KEITH: Now, of course, Fannie and Freddie, their funding is completely tied to the U.S. Treasury. So that shouldn't be a surprise. They've also announced the downgrade of several companies that work with U.S. treasuries, including the Fixed Income Clearing Corporation and the Depository Trust Company. And they can - they tell us that we can expect more of these types of rating changes to come down today, and in the days to come.

MONTAGNE: And, of course, we'll be following this story on NPR News all morning and all day long. Thank you, Tamara.

KEITH: Thank you, Renee.

MONTAGNE: That's NPR's Tamara Keith. Transcript provided by NPR, Copyright NPR.

Renee Montagne, one of the best-known names in public radio, is a special correspondent and host for NPR News.
Tamara Keith has been a White House correspondent for NPR since 2014 and co-hosts the NPR Politics Podcast, the top political news podcast in America. Keith has chronicled the Trump administration from day one, putting this unorthodox presidency in context for NPR listeners, from early morning tweets to executive orders and investigations. She covered the final two years of the Obama presidency, and during the 2016 presidential campaign she was assigned to cover Hillary Clinton. In 2018, Keith was elected to serve on the board of the White House Correspondents' Association.