Everyone is downplaying the Moody’s downgrade as either late or irrelevant but I’ll take the other side of that. In fact, what bothers me is that so many people in the administration and Congress are downplaying it.
In a truly AAA-rated country, when there is a downgrade, there is a reckoning. I don’t see that at the moment.
This moment is something of a fork in the road with Republicans in a position to reign in US spending while also dialing down the ‘ask’ on tax cuts. Instead, the US seems to be gripped (on all sides) by an idea that if there aren’t going to be any brakes, then they might as well step on the gas.
The bond market isn’t happy today with US 30-year yields up 13 bps and in danger of breaking out.
Maybe there are some real fiscal hawks left in Congress and this is the rallying point but yesterday the House Budget Committee that grandstanded on Friday promptly approved the bill 17-16 along party lines.
“Those conservatives have insisted that Medicaid work requirements take
effect immediately and that the clean energy tax credits be eliminated
sooner,” NBC News reported.
Does anyone think this bill won’t pass?
This article was written by Adam Button at www.forexlive.com.
