/biz/ - Business & Finance

[Anonymous No.3204474]

Fitch: Debt Ceiling 'Brinkmanship' Threatens U.S. Credit Rating
https://www.usnews.com/news/economy/articles/2017-08-23/fitch-debt-ceiling-brinkmanship-threatens-us-credit-rating

http://www.businessinsider.com/fitch-us-credit-rating-downgrade-debt-ceiling-2017-8
>Congress just got a big warning on how the debt ceiling fight could wreck the US economy
>One of the three big credit rating agencies issued a warning to lawmakers regarding the debt ceiling
>Fitch Ratings said in a statement that the AAA rating the US now bears would be in jeopardy if Congress can't get a deal done before the deadline to raise the borrowing limit.
>If the US were to slip close to a debt ceiling crisis, their ratings on the US debt could slip and make it more costly for the federal government to issue debt. In 2011, after the US brushed up against the debt ceiling deadline, S&P lowered its rating of US debt, sending shockwaves throughout financial markets.
>"We have previously said that prioritizing debt service payments over other obligations if the limit is not raised — if legally and technically feasible — may not be compatible with 'AAA' status."
>One option that has been floated in previous debates is the idea of "prioritization" — that the government could stop other payments and focus on paying interest on its debt to try and preserve faith in the bond market. Fitch said, however, that likely wouldn't help if it reconsidered its rating.
>"In Fitch's view, the economic impact of stopping other spending to prioritize debt repayment, and potential damage to investor confidence in the full faith and credit of the US, which enables its 'AAA' rating to tolerate such high public debt, would be negative for US sovereign creditworthiness"

How is biz planning on profiting from this potential happening?

[Anonymous No.3204477]

[Anonymous No.3204504]

https://www.cnbc.com/2017/08/23/fitch-us-aaa-rating-at-risk-if-debt-ceiling-not-raised.html
>in a statement that the prioritization of debt service payments over other government obligations, should the debt ceiling not be raised, "may not be compatible with 'AAA' status."
>The United States defaulting on its bonds, traders fear, would rattle financial markets worldwide.
>During the debt ceiling showdown in August 2011, Standard & Poor's stripped the United States of its highest rating.
>If either Fitch or Moody's were to follow S&P's downgrade, it could roil financial markets as investors reassess the creditworthiness of U.S. Treasuries.
>Immediately after S&P's downgrade six years ago, the Treasuries market rallied, sending yields lower.
>U.S. Treasury benchmark yields fell to session lows in the wake of Fitch's view on its U.S. rating.

[Anonymous No.3204508]

>>3204474
hasnt the US had its credit rating downgraded before, just after 2008?

whatever happened after the downgrade back then will probably occur again. short USD currency pairs along with the USD index or w/e its called im guessing

[Anonymous No.3204544]

>>3204508
Yes, see what I posted it talks about that.

[Anonymous No.3204707]

https://en.wikipedia.org/wiki/United_States_federal_government_credit-rating_downgrades
>Some lenders also have contractual requirements only to hold debt above a certain credit rating.
>Market consequences
>Global stock markets declined on August 8, 2011, following the announcement. All three major U.S. stock indexes declined between five and seven percent in one day.
>However, U.S. treasury bonds, which had been the subject of the downgrade, actually rose in price and the dollar gained in value against the Euro and the British pound, indicating a general flight to safe assets amid concerns about a European debt crisis.

(btw, it appears whoever wrote these doesn't know that bond price and it's yield have inverse relationship.)

[Anonymous No.3204713]

https://en.wikipedia.org/wiki/United_States_debt-ceiling_crisis_of_2011
>The crisis sparked the most volatile week for financial markets since the 2008 crisis, with the stock market trending significantly downward. Prices of government bonds ("Treasuries"), rose as investors, anxious over the dismal prospects of the US economic future and the ongoing European sovereign-debt crisis, fled into the still-perceived relative safety of US government bonds.
>Obama administration stated that, without this increase, the US would enter sovereign default (failure to pay the interest and/or principal of US treasury securities on time) thereby creating an international crisis in the financial markets.
>US reaction
>The NASDAQ, ASX, and S&P 100 lost up to four percent in value, the largest drop since July 2009, during the global financial crisis
>The commodities market also took losses, with average spot crude oil prices falling below $US86 a barrel.
>The price of gold fell, as deepening losses on Wall Street prompted investors to sell.
>International reaction
>China, the largest foreign holder of United States debt, said that Washington needed to "cure its addiction to debts" and "live within its means". The official Xinhua News Agency was critical of the US government, questioned whether the US dollar should continue to be the global reserve currency, and called for international supervision over the issue of US dollar.
>The downgrade started a sell-off in every major stock market index around the world, threatening a stock market crash in the international markets. The G7 finance ministers scheduled a meeting to discuss the "global financial crisis that concerns all countries."

[Anonymous No.3204723]

There are rumors of negative interest rates. Think about that.

[Anonymous No.3204772]

https://www.nytimes.com/reuters/2017/08/24/business/24reuters-usa-moody-s-debtceiling.html?mcubz=3
>Moody's Ties U.S.'s Top-Notch Rating to Debt Payments
>Moody's Investors Service said on Thursday it would consider stripping the United States of its top-notch rating in the event of a default
>The rating agency's warning about a possible U.S. downgrade seemed less dire and narrower in scope than that of rival Fitch Ratings