In the popular press, Treasury bonds (T-bonds) are commonly referred to as being ultra-safe. The party line goes something like this: "The US Treasury issues various securities of differing maturities. Like any widely traded security, you can buy them when they are issued and hold them to maturity or buy and sell them in the market at any time. Because Treasury securities are backed by the US government, they are the ultimate safe investment. But are T-bonds, which have the longest maturities of all Treasury securities, really the ultimate safe investment? It all depends on how you define the word safe. Sure, they are safe from default risk, but they carry a great deal of price risk. To illustrate, in the summer of 2014, the interest rate on 30-year T-bonds was roughly 4 percent. If you bought a 30-year bond then at its $1,000 par value and interest rates rose to 6 percent in 2015, your bond, with 29 years left to maturity, would be worth only $727. If interest rates continued to rise, to 8 percent in 2016, the bond with 28 years left to maturity, would be worth only $556. (In 1981, the rate on 30-year T-bonds was more than 13 percent, so the numbers in this illustration are within the realm of possibility.) In your view, are Treasury bonds as safe as some people claim? Should they be sold with a "warning label"? Under what conditions do T-bonds make the most sense for investors? When do they make the least sense? IL August 2011, Standard & Poor's downgraded US Treasury debt from AAA to AA+. What effect should that action have on the values of bonds outstanding at the time of the downgrade?