After a third quarter in which markets skidded and tumbled to the close, Treasuries were in their glory. The U.S. long government bond category was the only one whose performance was in the double-digit range. It catapulted to 27.9%, zooming past the second best group, Muni California Long, which was up 4.5%. Long bets on Treasuries comprised the top three, and were up 4.3%.

Those performances seemed to contradict a lot of gloomy predictions that all public entities - from tiny municipals all the way to federal government - had finally reached the limit on their ability to borrow and honor their debts. Investors reacted to Standard & Poor's first-ever downgrade of the United States' long-term rating to AA+ by looking around and deciding that they still had faith in Treasuries.

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