Friends
It was thought that Friday afternoon’s announcement from ratings agency Moody’s that they were downgrading U. S. debt from AAA to Aa1 would send shock waves through the markets. It was not non-consequential, but there really weren’t any shock waves. First of all, the other credit rating agencies S&P and Fitch had downgraded U. S. debt years ago, so the shock of a downgrade had worn off long ago. Second, I’m not sure if anyone really respects Moody’s opinions all that much after their disgraceful performance pre the great financial crises in 2008. Yes, credit ratings do affect things, but the markets already seem to have looked past it.
As for today, after an opening selloff, stocks mostly recovered with the Dow Jones Industrial Average posting a gain of 137 points to close at 42,792. The S&P 500 was up 5 points to finish the day at 5,963. The Nasdaq Composite Index was up 4 points to close at 19,215.
Treasury bond yields did move higher early in the trading session but recovered those losses to finish mainly unchanged. The worry that the credit rating change could make yields spike was at least muted for today. We’ll see if there is any real effect over time.
Have a nice evening everyone.
