Treasury And Market Responses To S&P Stunner

Tyler Durden's picture

The Treasury's prepared statement is out 25 minutes following the S&P planned downgrade, which only those who don't get inside information were surprised by.

  • US Treasury's Miller says S&P negative outlook underestimates ability of US leaders to come together to deal with US fiscal challenges
  • Both political parties now agree it is time to begin bringing down deficits as a share of GDP.
  • US economy is strengthening as it emerges from recent recession.

And the followign market responses from market participants via Reuters:

 "What the agencies want to see is real steps taken to improve the situation. in the absence of that a downgrade is not far.

"What then Obama administration has done in cutting the 2012 budget recently is to show that he is willing to engage. The ratings agencies have to take that as a positive, but they want to see more.

"Our call is for the 10-year yield to go to 4 percent by the end of the year on inflation and growth alone. That does not even account for issues surrounding the debt. Today may be the first day that the bond market starts to price in these budget issues." JOHN BRADY, SENIOR VICE PRESIDENT, MF GLOBAL, CHICAGO

"It's not an issue that is going to affect us today or tomorrow but the fact of the matter is, is room going to be made or not to get the fiscal house at least in some order during debt ceiling negotiations?

"This is tape bomb. It doesn't come as a complete surprise to the markets however seeing it in black and white print it is going to shake the market up for sure. You see the dollar down a bit, gold getting bid...and a break of 1298 on the S&P could send it to 1285 in the course of the week." HUGH JOHNSON, CHIEF INVESTMENT OFFICER OF HUGH JOHNSON ADVISORS LLC IN ALBANY, NEW YORK

"The simple thing to say is this is a big surprise. We've all known that credit conditions in the U.S. are borderline at best. The numbers compare with some of the more troubled countries in Europe -- if you look at deficit as a percentage of GDP or debt as a percentage of GDP. So we know that they are borderline but we didn't expect S&P would take this action, at least I didn't. It is going to put a lot of pressure on the Obama administration to move faster at reducing the deficits, or cutting spending and possibly increasing taxes. So it will put pressure on the Republicans as well. There will be pressure on Washington. It is not good news and it is not good news because to move towards austerity when the U.S. economy is not on sound footing is not a good idea. This comes incidentally right after the IMF has downgraded its view of the global economy. So it is likely to stir those worries or concerns about global growth. Not good news.

"They have good reason to be skeptical or worried. So this is going to put pressure on policy makers -- democrats and republicans alike -- to get their act together. And I'm not sure the timing of getting their act together is that good. And again, It is that idea of austerity before the economy is on sound footing." DOMINICK CHIRICHELLA, SENIOR PARTNER, ENERGY MANAGEMENT INSTITUTE, NEW YORK;

"We came in today with not a whole not new over the weekend. The geopolitical risk was stable with Nigerian elections coming in O.K. So what we're seeing is a continuation of the downward correction that started last week but paused midweek because of the inventory numbers.

"We will check the $107 a barrel technical support level today and if the momentum continues on the equities side, we will hit $103 a barrel soon." LOU BRIEN, MARKET STRATEGIST, DRW TRADING, CHICAGO

"The rating is the same, but the headline has enough of a shock value. The initial reaction is that this is negative for dollar assets across the board." CHRIS DILLMAN, ANALYST, TRADITION ENERGY, CONNECTICUT

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Racer's picture

'Sub-prime is well contained'

long juan silver's picture

Compared to an hour ago or 4 years ago?

Cleanclog's picture

And Finland now controls (at least strongly influences) the EU bailout fall apart.  Greece to 25% and Portugal to 15% as US Treasuries become junk and endowments take their gold physical.  It's a brave new world . . . 1984.

TruthInSunshine's picture

 ***BREAKING NEWS ALERT***

 

Fitch downgrades Ancient Rome to BBB- from BBB

 

***THIS HAS BEEN A BREAKING NEWS ALERT***

long juan silver's picture

I am shockedShocked at this outrage!

tom a taxpayer's picture

Was that a downgrade or just a credit watch for Ancient Rome?

Cursive's picture

@TruthInSunshine

Lulz. Very appropriate. The quote from Chirichilla is an eye popper of stupidity. "We knew it was borderline...but we didn't expect...". Dumbasses all around.

TruthInSunshine's picture
Fisher just basically stated Bernanke perjured himself (which we all knew, anyways). LULZ. Epic.
WALLST8MY8BALL's picture

We will continue to front run POMO and take the 3% layup

alpha60's picture

post-david lee roth VH entrance music... dooood.

eatthebanksters's picture

Sammy Hagar blow David Lee away!

Mentaliusanything's picture

Cliff diving is dangerous to your wealth

Is that the smell of fear ?

No that's the S&P losing its bowels

Could somone ring Yahoo its fallen off the page

 

Cindy_Dies_In_The_End's picture

Treasury:

 

Walks to podium, clears throat:

 

DU'OH!!!

Cleanclog's picture

Take your gold and silver physical. US downgrade not a surprise really, just get out of paper.  Paper debt (US Treasuries), US dollars, US munis etc etc etc

oogs66's picture

The treasury says S&P underestimates the possibility of government reaching budget conclusion? OMG! LOL!!! ROFL!!!  S&P overstates the possibility of doing anything.  Its all been lies.  They lied about the cuts - $38 billion --> less than $1 billion actual.  Compromise in December - spending up and taxes down!  Neither current plan calls for surplus, just less deficitis!   S&P looked at the numbers like ZH (about 2 years later) and just said what is common sense.   But since the market still, god knows why, places faith in S&P, its meaningful.

Boilermaker's picture

What time is the retarded reversal back to parity in the markets?

I want to sell my puts prior to the ramrodding.

magpie's picture

Kiwi in the Coalmine ?

http://www.reuters.com/article/2011/04/18/china-newzealand-swaps-idUSL3E...

(Reuters) - China and New Zealand have signed a 25 billion yuan ($3,83 billion) bilateral currency swap deal, the Chinese central bank said on Monday.

Mentaliusanything's picture

That sum would buy a fair chunk of those lovely Islands.

Blotsky's picture

It is going to put a lot of pressure on the Obama administration to move faster at reducing the deficits, or cutting spending and possibly increasing taxes.

Double speak for Austerity

eigenvalue's picture

Has anybody noticed today's GOFO and SOFO? GOFO rates have reached the lowest level since the beginning of this year!Another short squeeze seems to be on its way. 

kalum's picture

Who is John Galt?

andybev01's picture

A highly fictionalized character who is based upon an un-attainable ideal, in a fantasy novel written by a jaded, amoral hypocrite.

That is who John Galt is.

vote_libertarian_party's picture

"4% 10 year by the end of the year"

 

hahahhahaaa....you'll be lucky if it is under 4% at the end of the day.

Bob's picture

Looks like the pigmen are pushing the Austerity for Commoners agenda.  No surprise here . . . the stakes have become sufficiently extreme for them to start pulling out all the stops. 

Look at silver going vertical!

Henry Chinaski's picture

BTFD this morning.  Markets will be green before lunchtime.

Sudden Debt's picture

and stay green untill Christmass 2020 :)

 

bob_dabolina's picture

Surprise? What surprise?

$14 Trillion national debt

$113 Trillion in unfunded liabilities

and 50% of Americans don't pay income tax.

Like I said...what surprise? Were people hoping for an upgrade?

Sudden Debt's picture

You forgot to mention:

- 1.5 Trillion yearly deficits for decades to come

- Morons who have the funniest commercials get to be President

 

But yes... AT LEAST IT'S STILL BETTER THAN ZIMBABWE!!

 

for now...

 

writingsonthewall's picture

I'm so glad I'm on this site and not on some wanky CNBC securities show.

Where is Kramer? - is he going mental yet?

 

"This is tape bomb. It doesn't come as a complete surprise to the markets however seeing it in black and white print it is going to shake the market up for sure."

 

yeah right you total turd - don't worry about the brown stuff leaking out the back of your trousers - that's "all natural" - I'm sure you were all prepared for it...

treemagnet's picture

Bet is closes green anyway.....didn't Tyler have a thought or nine about the Fed buying directly sans POMO?

tslv50's picture

Why is it that only idiots get elected? Idiot, you elected them! 

Jason T's picture

1285!! oh noooo!!! 

 

treemagnet's picture

remember grasshoppa - free fall of 1000 point begin with drop of 20  (ancient chinese saying)

firstdivision's picture

If your balls drop 10 years too late, does it really make a difference?

Miss Expectations's picture

I've found a whole bunch of black and white Johnson's

http://www.greerspier.com/images/15hp.jpg

BrobamaReds's picture

****BREAKING NEWS****

April is the New May - Sell in April and go away.

White House blames El Nino for the misunderstanding.

10:00AM S&P ALGOS kick in.

Global mrkts RIP.

 

curbyourrisk's picture

Woo-Hoo....let the fun begin!!!!!!!!!!!!!!!!!!111

Sudden Debt's picture

Looks like "somebody" is going to buy some 2 year bonds....

 

3 Month      0.05%      +0.01 (25.00%)

6 Month      0.10%        0.00 (0.00%)

2 Year         0.66%      -0.02 (-2.94%)

5 Year         2.10%      +0.01 (0.48%)

10 Year       3.43%      +0.05 (1.48%)

30 Year       4.51%      +0.08 (1.81%

treemagnet's picture

please don't tease me.....its still monday.

r101958's picture

Just another entry in a lengthening list of manipulations.

AldousHuxley's picture

* US Treasury's Miller says S&P negative outlook underestimates ability of US leaders to come together to deal with US fiscal challenges

There is a void of leadership in US. Just talkers, no doers.Martin Luther King has been replaced by Al Sharpton, Lincoln has been replaced by Obama+Clintons, republican party has been replaced by neocon zionists.

* Both political parties now agree it is time to begin bringing down deficits as a share of GDP.

now is the time? It is way overdue and politicians will only bring asterity in non-defense spending. Basically put all our resources into military....US has WAR ECONOMY coming.

* US economy is strengthening as it emerges from recent recession.

If US economy consists of only top 0.1% of Americans. Everyone else is hopeless and depressed.

nickels's picture

S&P to Titanic captain as they climb into last lifeboat-- "By the way, your boat is leaking--"

Overflow-admin's picture

"It is not good news and it is not good news because to move towards austerity when the U.S. economy is not on sound footing is not a good idea"

But... but... economy IS recovering; how can they print that much propaganda???

Oops, sarc off: ><

SheepDog-One's picture

And why would there be a need for austerity measures if we WERE on 'sound footing'? WTF?

AldoHux_IV's picture

Sounds like a poor excuse to impose unnecessary harsh austerity measures because solving the structural issues are politically impossible, but continuing the slavery is politically attractive for our scum-sucking policymakers.