For a bad news week it takes some beating. When Moody’s placed the US sovereign’s sacrosanct triple-A rating on review for possible downgrade on July 13, Standard & Poor’s, which had already lowered its long-term ratings outlook to negative in April, added the US’ A-1+ short term rating to the negative watch list, noting that there was a “one-in-two likelihood that we could lower the long-term rating on the US within the next 90 days”.
But despite the double-barreled warning shot, treasuries barely flinched.
If anything, rates markets appear supported by the economic prognosis and credit can only take heart from US Federal Reserve chairman Ben Bernanke’s assurance that the Fed will re-open its quantitative easing programme should the economy require it.
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