This Week: Late Friday afternoon S&P downgraded US credit rating to AA+, a notch below AAA and put the US on negative credit watch. They waited until after US markets closed to make their move. Monday morning the US stock market will open substantially lower, maybe as much as 200+ points. The US Treasury markets will open better on safe haven moves. Last Friday the rate markets were weaker and likely would have been lower again on Monday had it not been for the decision by S&P. S&P is essentially questioning the will of the people and therefore Congress and this Administration the ability to actually deal with cutting spending; based on the circus we just went through it appears the will or guts are not there. S&P may actually be helping driver home a very serious point.
The week has Treasury borrowing $72B of notes and bonds on Tuesday through Thursday and the FOMC meeting on Tuesday. In Europe the ECB is buying sovereign bonds from those troubled countries. There isn't much in the way of economic releases; July retail sales on Friday is the only major report. With the auctions, the credit downgrade and the FOMC meeting markets may be very volatile this week.
TBWS
