There was so much noise over the weekend and yesterday about the Moody’s downgrade with even some doomsday scenarios.
If you look at the US30Y chart now, the market erased the entire rise and we are basically back to where we were before the downgrade. In fact,
as we now price in better and better conditions for growth, the economic
activity will
likely start to accelerate and that could lead to inflationary
pressures.
The Fed is also in a difficult position because rate cuts now
could exacerbate inflation fears and drive long term yields even
higher. That’s what will drive the bond market in the next months
So much fuss for nothing as US yields erase the downgrade rise
