Because now every bank or other financial institution in the world that holds US treasuries will have to take a haircut on those positions on Monday. The downgrade cost every and bank in the world a couple of hundred million. Let’s see who passes their stress tests, now, hmmmmm?
7/1 30yr: 4.4%; 10yr: 3.22%; 5yr: 1.8%; 6mo: 0.1%
8/5 30yr: 3.8%; 10yr: 2.58%; 5yr: 1.3%; 6mo: .01%
8/7 30yr: 3.9%; 10yr: 2.58%; 5yr: 1.3%; 6mo: .01% (10PM)
Bond rates have dropped significantly in 5 weeks and barely nudged higher since S&P's announcement. Banks have made money, not lost it. The stock market trauma is being caused by something bigger.