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Re: Michael Hudson: Obama's & the Misdirection Play
http://www.ft.com/intl/cms/s/85c8d80...#axzz1TiL9hYoJ
...S&P wants to see $4,000bn in cuts, far more than any of the proposals being discussed. But it is understood that the agency is unlikely to rush out with any statements if a deal is reached that delivers a deficit reduction well below this figure.
...asset managers maintain that a downgrade will not produce a wave of forced selling.
A survey of 29 investors by UBS found very few potential sellers of Treasuries. In the event of a downgrade, hedge funds were the only respondents who would sell and they were outnumbered by peers who would be buyers. Central banks and sovereign wealth funds would do nothing, the survey found.
“The Treasury market remains the primary beneficiary of global reserves amid a lack of alternatives,” said Ira Jersey, strategist at Credit Suisse. “A downgrade will convey no new fundamental information,” he added.
George Goncalves, head of interest rate strategy at Nomura Securities does not expect long-term investors will sell their holdings of US Treasuries.
...Last week, Fitch Ratings said: “In a moderate downgrade scenario, Treasuries are expected to remain the benchmark security that anchors global fixed income markets for the foreseeable future. Their status as the global benchmark security is bolstered by the underlying strength of the US economy, Treasuries’ deep liquidity and fundamental role in the global financial architecture, and the lack of comparable, marketable alternatives.”'
Moody’s, which last month initiated a review of the US sovereign rating said late on Friday that its “review for downgrade will more likely than not conclude with a confirmation of the Aaa rating, albeit with a shift to a negative outlook.”
http://www.ft.com/intl/cms/s/85c8d80...#axzz1TiL9hYoJ
...S&P wants to see $4,000bn in cuts, far more than any of the proposals being discussed. But it is understood that the agency is unlikely to rush out with any statements if a deal is reached that delivers a deficit reduction well below this figure.
...asset managers maintain that a downgrade will not produce a wave of forced selling.
A survey of 29 investors by UBS found very few potential sellers of Treasuries. In the event of a downgrade, hedge funds were the only respondents who would sell and they were outnumbered by peers who would be buyers. Central banks and sovereign wealth funds would do nothing, the survey found.
“The Treasury market remains the primary beneficiary of global reserves amid a lack of alternatives,” said Ira Jersey, strategist at Credit Suisse. “A downgrade will convey no new fundamental information,” he added.
George Goncalves, head of interest rate strategy at Nomura Securities does not expect long-term investors will sell their holdings of US Treasuries.
...Last week, Fitch Ratings said: “In a moderate downgrade scenario, Treasuries are expected to remain the benchmark security that anchors global fixed income markets for the foreseeable future. Their status as the global benchmark security is bolstered by the underlying strength of the US economy, Treasuries’ deep liquidity and fundamental role in the global financial architecture, and the lack of comparable, marketable alternatives.”'
Moody’s, which last month initiated a review of the US sovereign rating said late on Friday that its “review for downgrade will more likely than not conclude with a confirmation of the Aaa rating, albeit with a shift to a negative outlook.”
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