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Not As Bad As It Could Be
My first impression: Bad, but not as bad as it could be.
U.S. 10-year bond yields are currently quoted as only up 2 basis points.
S&P500 Index futures are moving up from levels earlier. For example, a few minutes ago they were -24.00, now they are -20.60. With Fair Value roughly 2 points lower from Friday, the implied initial drop when the U.S. markets open is about 1.5%.
That's not good certainly, but it is also not a disaster.
I have seen some research (very rough) that looked at previous country downgrades. Those countries equity markets actually rose over the next few days, weeks and months on most occasions. The general impression I got was that other issues at the time carried more weight.
That does not mean that the global markets wont plunge since this is the first time that the "global reserve currency country" has had its credit rating lowered. It is also not a guarantee that the U.S equity market will rally.
But perhaps we can view it as a reason to think first and to not immediately join the stampeding herd.
Have a good one...
Curtis Bergquist
Options Manager: Daily Decision-PRO
S&P 500 - Last 12 Month
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