By Kevin Buckland
TOKYO (Reuters) – US Treasury yields fell in Tokyo on Wednesday after scores company Fitch downgraded the nation’s prime credit standing.
The ten-year Treasury slipped about 3.2 foundation factors to 4.015% as of 0017 GMT, retracing a part of its 9 foundation level rise from Tuesday.
In a single day, Fitch downgraded the US authorities’s ranking to AA+ from AAA, citing anticipated monetary deterioration over the subsequent three years in addition to a excessive and rising total authorities debt burden. The ranking has been positioned on look ahead to a doable downgrade in Might.
“That is more likely to set off threat aversion outflows as Asian markets reopen,” Tony Sycamore, market analyst at IG, wrote in a notice to purchasers.
“Danger aversion means falling shares and secure shopping for of currencies such because the Japanese yen and Swiss franc towards riskier currencies such because the Australian and New Zealand {dollars} in addition to shopping for Treasury bonds.”
Fitch’s announcement comes two months after Democratic President Joe Biden and the Republican-controlled Home of Representatives reached an settlement on the debt ceiling after months of political brinkmanship, elevating the federal government’s debt ceiling of $31.4 trillion.
Paradoxically, Treasury notes, whose yields fall when costs rise, had been additionally purchased when Normal & Poor’s reduce America’s prime AAA ranking by one notch to AA-plus in 2011, following an earlier debt-ceiling standoff.
(Reporting by Kevin Buckland; Enhancing by Jacqueline Wong)
