During the Great Financial Crisis (GFC) of 07-09 – (some ways seems like an eternity ago…others yesterday – ok, digressing again) Credit Conditions fell apart quickly and with little warning….
The big three Credit Agencies at the time and still today ….Moody’s, Fitch and S&P Global – then called S&P were late to the softening credit cycle and caught a tremendous amount of scrutiny for a lack of warning as Credit Conditions brought a tremendous amount of pressure to the Financial System…
In True Fooled me once like fashion, they are intent on NOT being late to the party this time.
Fitch Threatens Further Downgrades
With Fitch stepping into the credit Downgrade pool first followed quickly by Moody’s, Fitch is back again raising awareness with a symbolic threat to the largest bank in the US, JPMorgan…
Would not be surprised to see the lone silent Agency speak up soon, S&P Global, if for no other reason to save face in case there is a serious weakening….
Bond investors are taking the comments serious and repricing interest rates Higher/Bonds lower values to accommodate higher risk associate with the agency call.
Short term a little headwind on bond values… long term a HUGE advantage in the form of bigger coupons from our Safe Money – NICE!
Oh… Jerome Powell and the rest of his board members on the FOMC (Federal Open Market Committee) have their popcorn out as they happily watch this slowdown occur !
Have a Great “Higher Safe Money Rates” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
Moody’s Credit Agency Jumps on Board and Downgrades 10 Banks along with “Keep an Eye Out” for More ….
Just Friday we mentioned Fitch Credit Agency Played Eye Spy and downgraded the USA credit worthiness by a very small amount from AAA to AA+…. the Eye Spy was due in part to the very large government spending acceleration number that showed up in the overzealous GDP print ….
Not to be outdone, a fellow credit agency, Moody’s chimed in as well
Moody’s Downgrades 10 Banks – Keep an eye on Others
As reported here by Reuters, Moody’s jumped into the pool and downgraded a slew of banks as well as put many on watch….
As mentioned in our post on the Fitch Downgrade, the US interest rates moved up after the ratings increase…. it would be expected all banks involved to see their standards tighten as well as their borrowing costs rise as well….
Why is this important you may ask?
This second rating decrease, by Moody’s will in effect help the FOMC in their pursuit of slowing the economy. Banks will broadly tighten lending standards!!
Have a Great “Moody’s Jumps into the Pool Downgrade” Day!
John A. Kvale CFA, CFP
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Posted in Debt - Debt Management, Economy, Education, Investing/Financial Planning, Market Comments
Tagged Debt Downgrade, Fitch, Moody's, Rating Downgrades