Further Evidence of a Rocky Recovery
S. & P.’s downgrade of U.S. debt offered investors no new information about the quality or the riskiness of Treasury securities. It has, however, challenged foundational assumptions about the workings of the global financial system at a difficult juncture for the fragile recovery.
The uncertainties introduced as a result coincide with other, less qualitative measures of the U.S. economy’s performance, which generally show that the recovery has slowed.
The rating adjustment’s blow to sentiment is amplifying concerns about what these metrics imply for the outlook, prompting investors to move out of risky positions and—ironically—into the safety of Treasuries. Read More
