There was worry that this would push up borrowing costs. The 10-year was at 2.33% in 2011. It is 1.56% today.
There was worry that foreign debt buyers would sell US debt en mass. Instead, we’ve seen a flight to safety as the world continues to snap up US Treasury securities. At 1.5%-ish, our 10-year is one of the highest yielding government securities as Germany, Japan, and Switzerland flirt with negative rates.
The ten year Treasury is a financial standard, often used as the basis for a hypothetical risk-free rate in financial models. Downgrading the foundation of these models was a very big deal. However, the S&P 500 is up over 100% since the downgrade, including dividends. Think about that the next time the investing world is supposed to end. Is the crisis du jour as big of a deal as the US getting downgraded? Probably not, but CNBC can’t just re-run episodes of Shark Tank all day so they act excited about Apple earnings and employment reports.