Rumor Confirmed: S&P Downgraded US Credit Rating After Markets

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Updated: The rumor that was running in the markets that credit rating agency S&P is set to downgrade the US and strip it from the perfect AAA rating i confirmed. The US now has a rating of AA+ according to Standard & Poor’s. The outlook is negative. This will have implications on the greenback.

Before the close: US yields were higher, and the dollar is weaker, but there are other reasons for a weak dollar.

Talk about a possible move by S&P appears on the twitter page of Ben White. H/T :FT Alphaville which mention the yields.

Update 23:15 GMT: Major US TV networks update that the White House is preparing for downgrade by S&P. At this hour, all markets are closed. If an announcement comes later in the US night, there will still be enough time for the markets to digest it before they reopen.

The announcement came. You can read it in full here.

If this materializes, it won’t come as a big surprise, as S&P has warned about it, and even specified the conditions necessary to avoid it: a program to cut debt by 4 trillion dollars. The deal’s scope is only a little more than half of that. S&P later danced around their statement, and we are still waiting to hear their reaction about the debt deal.Dollar death default

The main evident reason for the dollar’s fall is the news about Berlusconi accepting the ECB orders to bring forward austerity measures. In return, the ECB will buy some Italian bonds.

This is one of the busiest days in the markets, in one of the busiest weeks – the positive Non-Farm Payrolls report plays only second fiddle to all the news today.

Markets close at 16:00 Eastern Time, or 20:00 GMT. We’ll wait and see.

Further reading: Do we listen to rating agencies?

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About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

28 Comments

  1. Bonnie Smith Forex on

    The pessimism about the U.S. economic outlook took the S&P 500 to a new low for the year and forecasts of an extended down leg in the market.

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  4. Can someone please tell me then why a short position I placed on the Dow at 21:00, at a level 11445 is now out of the money on the basis of an index level of 11488 calculated by my spreadbetting site at 00:23? Does this reflect market reaction to this annoucement? Or is specific to my dealing site?

  5. Should have said that the short was placed at 21:00GMT on Friday, minutes before Wall Street closed, with abcnews reporting the downgrade at about 21:45 GMT. Point is, although I expected downgrade to be priced in somewhat, why has there been down shift downward on it being confirmed?

  6. Thanks for your comments. I am not following the Dow closely. In general, stock markets are currently expected to open lower on Monday.

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