As the government’s $700 billion bailout plan failed to pass in the House, fear tore through Wall Street and exchange traded funds (ETFs).
As the vote was shown on TV, stocks plunged as investors worried that the financial system would continue to collapse on failed mortgage debt, reports Tim Paradis for the Associated Press. Investors had worried that the vote would be close, but most believed it would pass.
Treasury debt prices rocketed higher in one of their biggest rallies of the year, as fears about the bank failures and the government’s rescue plan spread, reports John Parry for Reuters. The 10-year Treasury note’s price, which moves inversely to its yield, gained a full 2 points, putting it on track for its biggest gain since Sept. 15.
Bond investors were beginning to look closely at the bailout plan and questions about details contributed to the safe-haven appeal of government debt. Ultra-short-dated Treasury bonds benefited the most, as one-month rates dropped briefly to 0.05%, giving low returns in exchange for safety.
The financial crisis on our turf isn’t just our problem, either. The consequences of this mess will hit businesses and everyday people from Tokyo to Buenos Aires, reports the Associated Press.