Credit Rating Falls, YTM Declines?

One year ago, S&P dropped the credit rating on U.S. government debt from AAA to AA. Normally a decline in the credit rating results in an increase in the YTM of the debt. However, in the year since the credit rating drop, interest rates on 10-year U.S Treasury notes have fallen from 2.56 percent to 1.51 percent. Additionally, mortgage rates have fallen, the dollar has strengthened against an index of major currencies, and the  DJIA has risen 12 percent. The contrarian drop in interest rates is largely attributable to the size and resilience of the U.S. economy and the fact that the U.S. dollar is still the world's currency.