Post the downgrade, with the markets having somehow digested the news, all eyes are now on how countries holding US Treasuries will react. Most will not sell off as there are simply no other viable alternatives. Despite the downgrade, the truth is that US still remains one of the safest investment option when it comes to Treasuries. 

Here is a quick look at the major Treasury holders as at 31st May 2011: 

China Mainland – US$1159.80 billion; around 26% of the total treasury holdings by foreigners. 

Japan – Second largest holder of US treasury at US$912.4 billion. 

United Kingdom (incl. Channel Islands and Isle of Man) - US$346.5billion 

Oil Exporters (incl. Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait,Oman, Qatar, Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria) – US$229.8 billion 

Brazil – US$211.40 billion 

Taiwan – US$153.4 billion 

Caribbean Banking Centers (Bahamas, Bermuda,Cayman Islands, Netherlands Antilles and Panama and British Virgin Islands.) – US$148.3 billion. 

Hong Kong – US$121.9 billion 

Russia – US$115.2 billion 

Switzerland – US$108.2 billion 

Canada – US$90.7 billion 

Luxembourg – US$68 billion 

Germany – US$61.2 billion 

Thailand – US$59.8 billion 

Singapore – US$57.4 billion 

India – US$41.0 billion 

Source : Department of the Treasury/Federal Reserve Board