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Yes, a recent Money Stuff (covering the rumoured/leaked/mentioned indication this may happen) gave that example. It does seem to make it a bit meaningless, beca
by OJFord 3y ago
Yes, a recent Money Stuff (covering the rumoured/leaked/mentioned indication this may happen) gave that example. It does seem to make it a bit meaningless, because what can you do? They could make it BBB- (or BBb or whatever they use) and still nobody would actually be concerned about their US treasuries. It's a bit weird. I suppose Fitch et al. have to be seen to be following a process.
- DesiLurker 3y agothat makes me wonder if US treasuries get labelled below AAA then would that mean (some) pension funds may not invest in them. I think some have obligations to invest only in AAA. but of course we are long way from that as all 3 rating agencies would have to downgrade & thats not happening until default is in rear view mirror.
- OJFord 3y agoHe covered exactly that (and again today on this news: https://www.bloomberg.com/opinion/articles/2023-08-02/the-us-is-more-aa-now https://www.bloomberg.com/opinion/articles/2023-08-02/the-us..., it's free by email but I think unfortunately no (legitimate/non-archive) way to find old columns for free if you weren't subscribed at the time): > When we last talked about this in May, I looked at various rules — for money market funds, for Federal Reserve collateral, for cleared derivatives margin, for bank and insurance capital — until I got bored; all of them say that Treasuries are Treasuries, that they are treated as about as risk-free as it gets, without any reference to ratings. [...] If you have that trade, please email me! If you were allowed to hold Treasuries when they were rated AAA (by Fitch), but not now that they are rated AA+ (by Fitch), I would love to hear about it. But I don’t think there are a lot of those people out there.