Here we are, almost a year later, and S&P is still trying to justify the ratings cut which saw it cut the US’s AAA rating after Washington failed to play nicely back in August and raise the debt limit like good little bureaucrats…The result of the ratings cut was a drop in US 10-year yields from 2.58% before the rating s cut to 1.97% a week later.
S&P’s head of sovereign ratings said the cut was because of the real imminent danger of a liquidity crisis.
The liquidity crisis proved to be there was too much liquidity trying to buy US Treasuries, driving them below 2%, where we remain today.
Keep cutting, S&P!