Global Market – Fitch downgrades U.S. rating to AA+ from AAA
This week we will discus the decision by Fitch, a rating agency which downgrade U.S. rating from AAA to AA+ as budget deficit increases. China may continue to support economy and provide stimulus package to aid recovery and we will discuss BOE policy outcome as it raises rates by 25-bps to 5.25%.
U.S. rating downgrade by FITCH
U.S. sovereign credit rating was downgraded to AA+ from AAA, 1 notch down from AAA rating which highest rating by FITCH. The rating downgrade expects the fiscal deterioration over next three years on concern of growing general government debt burden and erosion of governance.
BOE Raises Rates to 5.25%
The UK central bank lifted its key rate a quarter point to 5.25% on Thursday, which was in line with market expectations after a surprise half-point increase in June. Still, signs of debate between policymakers prompted traders to pare bets on the pace of further hikes, with markets priced in for rates to peak below 5.75% in February.
China expected to cut Bank’s RRR to boost economy
That’s according to several analysts who’ve pointed to the mounting value of policy loans maturing this month and through the rest of the year as reason for the People’s Bank of China to unleash more liquidity.
Equichain Wealth Advisors: Market View & Opinion
Interest rate at current level is high compared to 2006 – 07 period which was followed by 2008 economic crisis. Interest rate hike seen from March 2022 was steepest rate hike in recent history and is yet to show its impact on economic activity.
Globally equity market is trading near its recent high, commodities are trading at lower level compared to post Russia-Ukraine crisis increase in prices. Global financial have not factored in any of the risk which can arise out of high interest rate and rating downgrade for U.S. or any other develop economies.