Yesterday I mentioned here that I thought a downgrade would happen regardless of the outcome of the debt deal, but that it wouldn't have much effect on the economy. This despite several talking heads on cable business channels going all hysterical about it (for example, Gerry Willis on Fox Business network - displaying her ignorance).
Here's more support for my opinion, including a chart -
The truth is, there just isn't that much other AAA-rated material out there for people to jump into.
Over at Stone Street Advisors, @dutch_book posts this great chart from Nomura showing the average impact on 10-year yields from the entire history of sovereign AAA downgrades by S&P.
Guess what: Historically yields go lower after such an event.
As he puts it: "from the look of things every historical precedent seems to prove that an S&P AAA downgrade is the bell rung for govvie buyers to re-enter the market."
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