What happened?
Just before the closing bell on Friday Moody’s published the downgrade of the U.S. government, citing large fiscal deficits and rising interest costs. They now lost their last Triple A rating, which is the highest there is and the US now has a AA1 from every major rating firm. Which is still very good. Only three other G20 states still have AAA from Moodys, namely Germany, Canada and Australia. UK for example only has AA3 or China and Japan an A1.
Is that a problem?
Well if yoi take into consideration that Moodys was
not the first to downgrade and if you have followed the topic in the past months, this is not really breaking news. The US has high levels of debt, everybody knows already, and paid more than $1B in interest on it last year. So this is in my view only a logical consequence by Moodys and a confirmation of the reality everybody knows anyways.
Although some people already started to spread FUD of another bloody Monday ahead, I myself don’t expect a bigger market reaction. The 10Y bond yield has risen a bit but that was the trend of the last weeks anyways and Bitcoin is also quite stable. Both indicators are hinting that nothing major changed for the markets.
What do you think? Will we see a somewhat delayed reaction from the stock market after all?
