Maybe financial markets are waiting for the actual downgrades. But that would contradict an investment law as basic as gravity: Markets are forward-looking. At any given moment, they anticipate information that’s known or even suspected. S&P announced a negative outlook on the U.S. (warning of a possible downgrade) in April, and Moody’s announced something similar earlier this month. By now, anything that would have happened has happened…
The world doesn’t need help analyzing Treasurys, though. No entity in the world is more closely watched than the United States government, not even Lady Gaga. And none publishes more and better information on its financial condition. The sort of investors who decide Treasury prices–foreign governments, giant mutual funds, the Social Security Trust Fund–don’t wait for S&P or Moody’s to tell them whether to buy. They do the math themselves.
They also have limited choices.
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