“Standard & Poor’s put a“negative” outlook on the U.S. AAA credit rating, citing rising budget deficits and debt. “We believe there is a material risk that U.S. policy makers might not reach an agreement on how to address medium-and long-term budgetary challenges by 2013,” New York-based S&P said in a report today. “If an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.”
The balance between QE and Treasury supply will begin to shift in July. The underlying bid it has provided for stocks and Treasuries will begin to fade.
This report tells why, and what to look for in the data and the markets. GO TO THE POST
Under President Barack Obama’s fiscal year 2012 budget, released in February, the total debt subject to the ceiling would be $20.8 trillion in 2016. The plan House Republicans approved April 15, written by Budget Committee ChairmanPaul Ryan, would need a debt ceiling of at least $19.5 trillion, according to data compiled by Bloomberg Government.
Treasuries fell, reversing earlier gains, after S&P lowered its outlook to negative from stable. The benchmark 10-year note yielded as much as 3.45 percent in New York before trading little changed at 3.43 percent. The dollar dropped 0.7 percent to 82.58 yen and pared its gain versus the euro. The S&P 500 Index fell 1.5 percent.”