As mentioned, investors face yet another bumpy start to the trading week, although it’s mounting concern over US debt rather than tariffs that is likely generating the volatility this time. The downgrade risks reinforcing Wall Street’s growing worries over the US sovereign bond market as Capitol Hill debates even more unfunded tax cuts and the economy looks set to slow as President Donald Trump upends long-established commercial partnerships and re-negotiates trade deals. US yields ground higher for the third consecutive week, with the move by Moody’s pointing to another fall in bonds and a rise in yields. However, early trading in currency markets saw the dollar mixed against its Group-of-10 peers, suggesting the impact will be minor.
- We can see the US 10’s continuing their sideways dance around the 4.5% level until we get economic clarity.
