Yesterday we posted what we thought was the #1 reason not to fear a ratings downgrade in the US: The truth is, there just isn’t that much other AAA-rated material out there for people to jump into.
But this is even better.
Guess what: Historically yields go lower after such an event.
As he puts it: “from the look of things every historical precedent seems to prove that an S&P AAA downgrade is the bell rung for govvie buyers to re-enter the market.”
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