Tag: sovereign credit ratings

Has the UK finally lost its safe haven status?

Has the UK finally lost its safe haven status?

For domestic investors, the safe haven asset class are government liabilities if the government has substantially all liabilities in the currency it creates. For foreign investors, like domestic investors, you want to protect against default risk by investing in a currency area’s risk-free asset class but you also want to mitigate currency risk. That’s what safe haven risk is all about. The other stuff is irrelevant.

Why Moody’s downgrade of UK sovereign debt is meaningless

Why Moody’s downgrade of UK sovereign debt is meaningless

Moody’s took away the UK’s triple A rating late Friday. A ratings downgrade has long been rumored, and although the timing is always surprising, the move itself has long been anticipated. Sterling slumped on the news in thin dealings, losing a cent in about 30 minutes. When it comes to corporate ratings we can appreciate that rating agencies may have access to private information. They may also be of value in some developing countries, where information is more difficult to secure. However, when it comes to large developed countries, the rating agencies have access only to public information and it is the same information that investors use to make their decisions.

Obviously we would add 10 zeros but you get the picture

The Trillion Dollar Coin would be bullish for Treasurys

I just wanted to follow up on Randy Wray’s last post to look at this Trillion Dollar Coin idea from an investing perspective. I believe the coin would be bullish for Treasuries because it lowers average Treasury duration and alters private portfolio preferences in a manner similar to quantitative easing. Otherwise, it has no real economy effects.

Daily: On France as the time bomb at the heart of Europe

Daily: On France as the time bomb at the heart of Europe

Note: this daily will not have links as I am still on holiday. But, I will begin to post more in the coming week and resume a normal posting schedule next week. Yesterday, Moody’s Investors Service finally downgraded the sovereign credit ratings for France from AAA. This was a long time coming because France’s sovereign fundamentals are no better than […]

Full Text: Moody’s downgrades France’s government bond rating to Aa1 from Aaa, maintains negative outlook

Full Text: Moody’s downgrades France’s government bond rating to Aa1 from Aaa, maintains negative outlook

Editor’s note: Moody’s issued the following ratings notice today Moody’s Investors Service has today downgraded France’s government bond rating by one notch to Aa1 from Aaa. The outlook remains negative. Today’s rating action follows Moody’s decision on 23 July 2012 to change to negative the outlooks on the Aaa ratings of Germany, Luxembourg and the Netherlands. At the time, Moody’s […]