Ok folks, we had a pretty exciting hour or so following that downgrade of the US debt outlook from S&P.
Now that things have settled down it’s really clear what’s going on.
The news is not being treated as particularly meaningful regarding the US debt situation. It’s just being treated as a risk-off spur — a chance to sell winners and buy liquid safe-havens.
So what does that mean? Stocks are diving.
The Dow is off about 190, and the dollar is higher. Silver and gold spiked initially on the news, but are now lower. Treasuries had dived initially on the news, but are now recouping their losses.
Check out 10-year bond futures. They’re back to where they were about… 6 hours ago.
The key thing is that all of the old relationships are basically in place. Gold and silver still basically go in the same direction as the market. The dollar is moving opposite to the general market (as it has been doing for years).
From FinViz, a look at the wild action in silver futures.