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Gold Explodes On S&P Downgrade Warning -- high @ 1498.60

posted on Apr 18, 2011 09:57AM

Gold Explodes On S&P Downgrade Warning

Submitted by Tyler Durden on 04/18/2011 09:13 -0400

Who would have thunk that the one beneficiary of an insolvent US (with both bonds and stock futures plunging) would be gold. Oh wait...

Treasury And Market Responses To S&P Stunner

Submitted by Tyler Durden on 04/18/2011 09:31 -0400

The Treasury's prepared statement is out 25 minutes following the S&P planned downgrade, which only those who don't get inside information were surprised by.

US Treasury's Miller says S&P negative outlook underestimates ability of US leaders to come together to deal with US fiscal challenges
Both political parties now agree it is time to begin bringing down deficits as a share of GDP.
US economy is strengthening as it emerges from recent recession.

But the comment of the day comes from Hugh Johnson (no seriously): "This is tape bomb. It doesn't come as a complete surprise to the markets however seeing it in black and white print it is going to shake the market up for sure. You see the dollar down a bit, gold getting bid...and a break of 1298 on the S&P could send it to 1285 in the course of the week."

STUNNER: S&P REVISES US OUTLOOK TO NEGATIVE

Submitted by Tyler Durden on 04/18/2011 09:02 -0400

The negative outlook on our rating on the U.S. sovereign signals that we believe there is at least a one-in-three likelihood that we could lower our long-term rating on the U.S. within two years. The outlook reflects our view of the increased risk that the political negotiations over when and how to address both the medium- and long-term fiscal challenges will persist until at least after national elections in 2012. Some compromise that achieves agreement on a comprehensive budgetary consolidation program--containing deficit reduction measures in amounts near those recently proposed, and combined with meaningful steps toward implementation by 2013--is our baseline assumption and could lead us to revise the outlook back to stable. Alternatively, the lack of such an agreement or a significant further fiscal deterioration for any reason could lead us to lower the rating.

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