Skip to comments.Dollar to drop on S&P move; safe-haven demand seen
Posted on 08/07/2011 3:57:34 AM PDT by markomalley
The U.S. dollar may weaken and Treasury yields rise when Asian markets reopen on Monday, though any selling in response to ratings agency S&P's downgrade of the United States is likely to be tempered by the escalating crisis in the euro zone.
The S&P cut in the U.S. long-term credit rating by a notch to AA-plus is an unprecedented blow and results from concerns about the nation's budget deficits and climbing debt burden. It called the outlook "negative," signaling another downgrade is possible in the next 12 to 18 months.
"The initial reaction will be a high degree of uncertainty and thus volatility since investors will not know where to turn for safety," said Mark Mobius, executive chairman of Templeton Emerging Markets group, in an email to Reuters.
"During the sub-prime crisis safety was in U.S. Dollars and U.S. Treasuries. Now that anchor to the global community is deteriorating," added Mobius, whose unit oversees $50 billion in emerging market assets.
Fears of a slide back into recession for the world's biggest economy prompted a global sell-off that wiped $2.5 trillion off company values over the past week, with consumer discretionary shares of firms dependent on external demand likely to be singled out for more punishment.
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I will be amazed if Obama makes it out of this country alive in 2012, I really will be.
This next week will be very interesting to watch. It’s smelling like Lehman all over again.
What makes our situation worse is that the leader of the Senate is completely enamored of the President who thinks he can go on borrowing to bail himself out.
I will be amazed if the USA is a functioning state by then.
Well the cool thing is that the USA is made up of 50 little nations that can pick up from there....hopefully.
I think that should be plural “the leaders of the Senate” are without doubt the most feckless unimaginative bunch of Democrat morons this nation has ever produced. their one-note samba, help the poor, has in fact impoverished what should be a wealthy dynamic nation and is driving us to a political civil war.