The yield on the benchmark 10-year Treasury fell to 2.35% Monday morning, nearing its all-time low as stocks sold off in the wake of Standard & Poor's historic debt downgrade on the U.S.

Not only was the U.S. downgraded, but so too were Fannie Mae, Freddie Mac and the entire Federal Home Loan Bank system. Fannie and Freddie, wards of the U.S. for almost three years, supply liquidity to 70% of the mortgage market.

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