S&P-effect diminishes
EUR USD (1.2725) S&P delivered yet another indictment yesterday and downgraded EFSF by a notch. Moody’s, on the other hand, maintained France’s triple-A, although with a warning about its fiscal condition and the banking sector. The equity and the bond markets, and even the euro, reacted, but in a rather subdued manner. In any case, all asset classes managed to circumvent a significant slide. Should we then conclude that S&P’s downgrades did not really disrupt what, up until last week, appeared to be a reversal of the vicious cycle of rising yields, austerity and stagnant growth?
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Deutsche Bank
Fixed Income Research – Global