Strategists at BlackRock Investment Institute wrote that although Fitch’s action is unlikely to be a market driver, it “reinforces our view that rising inflation and debt burdens may cause investors to demand more over time.” Will induce… government debt to compensate for long-term risk.”
“We see DM (developed market) bond yield curves increasing over time as long-term yields rise,” he said.
For now, however, many investors are focused on the near-term outlook for the US economy, as the country looks increasingly likely to avoid the recession that was widely expected earlier this year.
Josh Frost, the US Treasury’s assistant secretary for financial markets, said he did not expect demand for Treasury debt to be affected by Fitch’s announcement.
“Treasuries remain the safest and most liquid assets in the world and we are seeing strong demand from our broad and diverse investor base,” he added.
Data released last week showed the US economy grew faster than expected in the second quarter as a resilient labor market supported consumer spending, despite a sharp interest rate hike by the Federal Reserve. are pricing in a soft-landing scenario.