MBCC TH 2nd August'23 - "US debt downgrade, are we surprised? More important, what is mispriced here and asset allocation for q3?"

Fitch downgrades the United States' long-term credit rating from AAA to AA+. Fitch says that "repeated debt-limit political standoffs and last-minute resolutions" are to blame. Well, we are not even talking about debt ceiling debates, but Yellen/Treasury just announced $1 trillion of debt issuance in q3 and another $700 bln + in q4 - what do you expect?

The US economy has lost its trajectory…it may have green shoots of Goldilocks and bright spots, but there is always a delayed reaction when fiscal/monetary excess catches up.

Why are Bond yields rallying and how far can they go? What is the best risk reward here to play into q3?