Stock Market Plunge Sends Investors to Downgraded Bonds

FRESNO, California

Financial consultant Brian Ullman of Fresno's LPL Financial tells Action News; "The concern is people will stop doing anything. That's where we get these fears is this going to launch us into another recession."

Ullman doesn't believe another recession is coming. He points to the mixed messages on Wall Street. While one rating agency lowered the nation's credit rating, investors are rushing to buy U.S. credit, in the form of Treasury Bonds. "That's where people go to park their money when they are nervous and people are definitely nervous today."

The result, interest rates that are already at a record low, are going lower for a while anyway. That's because interest rates are tied to Treasury Bonds. The more bonds the government sells, the lower the interest rate it pays.

Mortgage Broker Matt Navarro of California Funding and Investments believes low rates will be here for a while.

"The economy is just too weak to do anything other than keep rates low."

Marc Navarro says this comes as lending has already loosened up a little. He sees more investment flowing into the United States because Europe and other parts of the world have bigger problems. "We're less bad. We're less bad than the rest of the world."

Real Estate is one area that continues to lag, even though there are lots of cheap homes and interest rates are really low. Real Estate Broker Jim Whitlach, who's the President of the Fresno Association of Realtors, believes now really is the time to buy. "Why more people won't step up to the plate to take advantage of that is mystifying to a lot of us. Some people are just concerned they might not have a job a year from now or two years from now."

The financial analysts we spoke with say the volatility in the stock market will get worse, if it causes consumers and employers to lose confidence in the economy.

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