Fitch downgrade of U.S. debt strips off their AAA rating, now AA+. Growth/Spec stocks sell off, 2% 10 YR Yield and USD rally. The 10 YR yield is now at 4% before the SVB bailout. U.S. oil stocks are at the lowest in history, will eventually show up in the oil price.
Chart 3
The U.S. has lost its AAA credit rating and its bonds are now rated AA+, which on the whole is a generous downgrade at that, courtesy of Fitch. Simple finance 101 is that one cannot maintain a debt binge, particularly when the COVID pandemic decimated government finances, to offset inflation. It's a ridicules notion. Yet, perpetuated by governments globally with Central Banks slowly lifting rates to curtain inflation that is/was and may return to its four decade highs. There is still too much liquidity floating around and of course it is ending up in speculation ala the NASDAQ and BITCOIN. It is a no brainier. All the while oil and energy markets are beginning to stir again, in similarity to 2022 highs when inflation began to reach its so called peak.
Chart 1 shows, finally, the NASDQ futures coming off its boil, dropping 2% after the Fitch downgrade, while the yield on the 10YR and the U.S. dollar futures rallied.
The yield is now up over 4% before the Silicon Valley Bank 'bailout', which is negative to growth stocks, and yes that means AI/Crypto/Blockchain/ and whatever else startups that are make no money. Hence the sell off. Please refer to Chart 2.
Chart 3 shows the oil price, which collapsed under its $80 resistance on the back of USD bids after the Fitch downgrade. However, Chart 4 is extremely alarming, showing after the Energy Information Administration (EIA) weekly report, showed that U.S. crude stocks are at there lowest level, ever. At 786 million barrels compared to the Jan 2022, when U.S. oil stocks were at 1 Billion. Is an astounding drop in U.S. oil stockpiles.
Smells like 1970's stagflation.
Can the highest employment rate in decades hold?
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