Downgrade or not, flight to quality still ends with US Treasuries
So Standard & Poor's finally bit the bullet and, after nearly choking on its own mathematics, downgraded the United States' AAA credit rating. That leaves 18 countries and seven companies, including our own MTR Corp, with a better credit rating than the US, according to Bank of America Merrill Lynch.
So you would expect this to be reflected in the yields at which these bonds trade. However, the yield on MTR Corp's AAA 10-year bond, which matures in January 2014, closed at 1.52 per cent yesterday, from 1.56 per cent earlier that day. However, the newly rerated US Treasuries, which mature at the same time, were yielding 0.323 per cent, from 0.329 earlier.
So what are the markets telling us? Stocks are falling as investors flee equities and buy bonds. Meanwhile, yields on US Treasuries are tightening due to erm ... a flight to quality?
A matter of perceptions?
We have not heard much in recent months about Jing Ulrich, JPMorgan's chairwoman of global markets for China. However, we had a note from the bank's corporate communications people alerting us to her inclusion in FinanceAsia's top 20 women in the regional finance industry.