Tuesday, Dec 08, 2009

Good News, House prices are up!

Bloomberg: Moody’s Says U.K., U.S. AAA Ratings Relatively Weaker

“The U.K.’s fundamentals are dismal and don’t support the ratings,” said Mark Schofield, head of interest-rate strategy in London at Citigroup Inc. “Only if some pretty draconian fiscal measures are in place will the U.K. keep hold of its Aaa rating.”

Posted by estrader @ 03:25 PM (1374 views)
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1. jack c said...

M&G's Leaviss 2010 outlook: UK rating downgrade looms over gilts
By Jim Leaviss | 10:09:58 | 08 December 2009

Full story @ www.citywire.co.uk/professional/-/news/wealth-management/content.aspx?ID=371843&Page=1

One of the major questions for 2010 will be how long bond investors will continue to finance the UK’s budget deficit. If the budget deficit is not addressed by policy makers, there is a substantial chance that the UK’s sovereign credit rating will be downgraded by one if not all of the credit rating agencies. Should this occur, it would have massive implications for investors in gilts.

We are bearish gilt yields for 2010. This negative view is entirely due to technical factors, rather than a structural increase in inflation.

The huge supply of government bonds that are likely be issued to fund government borrowing over the next couple of years will put upward pressure on yields, particularly once the support from ongoing QE buybacks has been withdrawn.

Yields are being kept artificially low through QE, but a move toward higher yields once this stimulus is removed is a genuine concern. Any signs of economic weakness, or bouts of investor risk aversion, will likely provide temporary support for gilts as investors seek the security of “safe-haven” assets.

Tuesday, December 8, 2009 03:54PM Report Comment

2. Carol said...

Replace UK with US in the above. Not much difference, really, except that the US currently has the reserve currency, but that's changing.

Tuesday, December 8, 2009 04:15PM Report Comment

3. stillthinking said...

I hope they aren't using New Labours A level marking system. Straight As right up to clapping practice.

Tuesday, December 8, 2009 04:27PM Report Comment

4. Yoss said...

We will lose it! No political party dare mention the cuts that need to be made as 48% of the electorate are employed by them.

You can raise taxes....but sooner or later, those that can...Will leave.

30-60% of what you earn (Include emp NI in that figure).... 20% of what you spend (New year VAT rate) + 10% Stealth taxation and 10% transport/housing costs..... If you can be productive/compete on a global scale....You are mad to stay.

Tuesday, December 8, 2009 09:21PM Report Comment

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