Debt: S&P Affirms US AAA Rating, Cuts Outlook to Negative - 18 April 2011 (http://www.cnbc.com/id/42643384)

"...the S&P said the move signals there's at least a one-in-three likelihood that it could lower its long-term rating on the United States within two years.

The U.S. dollar fell broadly on word of the revision. Gold prices, meanwhile, hit a new [nominal] record above $1,496 an ounce..."

Great news. For North Korea and Iran

I'm surprised they lower their outlook to negative. This is the same organization that had Lehman Brothers rated A when they went down.

...keep an eye on the bond market -- especially the yield spreads between US treasuries and the German bunds.

...keep an eye on the bond market -- especially the yield spreads between US treasuries and the German bunds.


EURO GOVT-Bunds at session high after S&P revises US outlook - 18 April 2011 (http://uk.reuters.com/article/2011/04/18/markets-bonds-euro-idUKLDE73H1DS20110418)

"...Bunds outperformed U.S. Treasuries, pushing their 10-year yield spread to 16 basis points, the widest in a week.

"Treasuries are being sold off on the back of S&P's outlook revision to negative for the U.S. and people are buying Bunds instead," one trader said..."

U.S. debt default insurance prices rose 7.7% -- Wednesday, 27 July 2011 (http://www.f-paper.com/?i651949-U.S.-debt-default-insurance-prices-rose-7.7%)

"...according to CMA data released Wednesday, the U.S. national debt default insurance substantially more expensive than the previous day up 7.7%, indicating that the market's fear of breach of the United States rose significantly. Nevertheless, the price still significantly lower than most countries in Europe.
Five-year U.S. credit default swaps (CDS) spreads increased to 62.6 basis points (1 basis point per million), significantly more than 58.1 basis points the day before at the same time, the Greek year CDS spreads from the point to 1656.3 1677.5 basis points, Ireland by 873.9 basis points to 883.2 basis points, Italy, CDS spreads increased to 288.2 basis points from the 272.6 basis points, while Spain, CDS spreads increased to 336.5 points from 322.3 basis points..."


http://i112.photobucket.com/albums/n167/cameron405/okctalk/Screen-shot-2011-07-27-at-13350-PM.png

TREASURIES-Bonds fall on disappointing 5-year note auction -- Wednesday, 27 July 2011 (http://www.reuters.com/article/2011/07/27/markets-bonds-idUSN1E76Q1RE20110727)

* US 5-year notes auction met with tepid demand

* US 1-year CDS jumps to record on Washington stalemate

* Investors see US default remote, likelihood of downgrade

Fitch keeps US AAA rating, review ongoing 08.02.2011 11.08.02 01.17.00 PM

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* Fitch keeps AAA rating but says U.S. debt must shrink

* U.S. must make decisions on taxes and spending

* Other agencies may still cut U.S. rating (Recasts, adds detail, quotes)

By Daniel Bases

NEW YORK, Aug 2 (Reuters) - Fitch Ratings upheld its AAA rating on the United States on Tuesday after lawmakers approved spending cuts that will help avoid a U.S. default, but warned that the world's largest economy must reduce its debt burden or face a downgrade.

The firm said while the agreement means default risk is extremely low, the United States "must also confront tough choices on tax and spending against a weak economic backdrop if the budget deficit and government debt is to be cut to safer levels over the medium term."

The vote of confidence from Fitch, however, will not dispel fear that ratings agency Standard & Poor's will cut the nation's top-notch rating.

Although the bill removes the threat of imminent default by raising the national debt limit enough to last until 2013, its cuts are only about half the $4 trillion in savings that ratings agencies Standard & Poor's and Moody's have said would be enough to confirm the country's triple-A rating with a stable outlook.

Even after a bruising battle in Congress to complete a $2.1 trillion deficit reduction deal, Fitch said the AAA status remains strong.

Despite the Fitch statement, investors continued to move to safer assets. U.S. Treasuries added to gains and Wall Street stocks and the dollar were stuck in negative territory.

The dollar, already falling against the Swiss franc after weak economic data, fell to an all-time low in the wake of Fitch's statement. However, the greenback held steady against the euro, which is struggling with a sovereign debt crisis of its own.

Other ratings agencies have also warned of a potential downgrade of U.S. credit depending on the scope and size of the deficit cutting agreement.

"The more important question here is whether the bill will be enough to appease S&P, which wanted $4 trillion in cuts, with many in the market believing that there is a realistic chance of a downgrade from S&P," said Gennadiy Goldberg, fixed income analyst at 4Cast Ltd. in New York

Fitch noted that without significant changes in fiscal policy, debt as a percentage of gross domestic product "will reach 100 percent by the end of 2012, and will continue to rise over the medium term - a profile that is not consistent with the United States retaining its AAA sovereign rating."

"The agreement is an important first step but not the end of the process toward putting in place a credible plan to reduce the budget deficit to a level that would secure the United States' AAA status over the medium-term," Fitch said.

The firm said it expects to conclude its scheduled review of the U.S. sovereign rating by the end of August. (Reporting by Daniel Bases, Pam Niimi, Chris Sanders, and Richard Leong)


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MONEY MARKETS-U.S. bill rates tumble on debt deal passage 08.02.2011 11.08.02 01.42.00 PM

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* Europe's debt woes add safe-haven demand for T-bills
* Fitch says U.S. can keep its AAA rating for now
* One-month bill rate set for biggest 1-day drop since '08
* Overnight repo rates still elevated on downgrade risk
(Updates throughout, changes byline, dateline, previous
London)
By Richard LeongNEW YORK, Aug 2 (Reuters) - Interest rates on U.S. Treasury
bills tumbled for a second day on Tuesday as Washington raised
the federal debt ceiling in a bid to prevent a sovereign
default and possible market chaos.
Relief that the United States had skirted a crisis helped
lower borrowing costs in the repurchase market, which banks and
Wall Street firms rely on for short-term cash.
Worries over Italy's finances renewed fears over Europe's
own debt crisis and fueled safety bids for T-bills.
"It's a run to safety. It's about liquidity. It's just one
country after another," said Justin Lederer, Treasury
strategist at Cantor Fitzgerald in New York.
Treasury bill rates fell to their lowest in a week. The
one-month T-bill rate fell 10 basis points in
afternoon trading, on track for its biggest one-day drop since
October 2008, shortly after the collapse of Lehman Brothers,
according to Tradeweb.
Rates on T-bills maturing on Thursday ,
which the government might have had to skip repaying if its
statutory $14.3 trillion debt ceiling were not raised by the
end of Tuesday, were down 16 basis points on the day at 0.04
percentage point.
On Friday, their rate flirted with 0.30 point.
The rally in T-bills intensified in afternoon trading after
Fitch Ratings, a major bond rating service, said the United
States can keep its AAA sovereign rating on the expected
passage of the $2.1 trillion debt-reduction deal for now. For
more see [ID:nN1E77114G].
Concerns, however, persist that rival rating agency
Standard & Poor's could strip the world's biggest economy of
its top-notch credit rating, raising its borrowing costs.
"The more important question here is whether the bill will
be enough to appease S&P, which wanted $4 trillion in cuts,
with many in the market believing that there is a realistic
chance of a downgrade from S&P," said Gennadiy Goldberg, fixed
income analyst at 4Cast Ltd in New York.
The Treasury auctioned $23 billion in one-month bills due
Sept. 1 at an interest rate of 0.070 percent,
matching the level at the one-month auction May 8.
[ID:nTAR000387] Last week it auctioned one-month bills at a rate of 0.06
percent .
In the $1.6 trillion repo market, what lenders charge banks
and Wall Street firms for overnight funds fell but remained
elevated from the levels a month ago before the political
fighting over the U.S. debt ceiling worsened.
The overnight rate on repos backed by Treasuries was last
bid at 0.22 percent in afternoon trading after
nearing 0.40 percent earlier. It is still well above the 0.03
to 0.05 percent bid range a month earlier.
On the supply front, Washington's debt deal will unlikely
revive the Treasury Department's Supplemental Financing
Program, adding T-bill supply in the near future, according to
Credit Suisse.
This program allows the Treasury to issue $200 billion in
cash management bills and deposit the proceeds with the Federal
Reserve to drain excess reserves from the banking system. The
Treasury suspended issuance of SFP bills in mid-May when the
debt ceiling was initially reached.
More than half of the initial $400 billion increase in the
debt ceiling will be earmarked for a return of nonmarketable
debt into government retirement plans. "That leaves
insufficient room from the start for a return of the SFP,"
Credit Suisse strategist Scott Sherman wrote in a research note
published late Monday.
(Editing by James Dalgleish)





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