# Dollar downgrade by S&P - how will this affect Euro interest rates?



## Spear (6 Aug 2011)

Anyone care to speculate how the recent downgrade on the US will affect the interest rates over here?


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## Jim2007 (6 Aug 2011)

Well why do you think it should?


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## tvman (6 Aug 2011)

Treasury Bill yields were negative for a while last week when this downgrade was expected  -  I think the downgrade will be a non-event. The downgrade itself doesn't make it any more likely the US will default. Effect on interest rates here - probably none i would think unless the dollar falls dramatically, then the ECB would presumably cut rates (unlikely to be a major dollar reaction - I'd say this was already partially priced in)


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## tvman (8 Aug 2011)

tvman said:


> Treasury Bill yields were negative for a while last week when this downgrade was expected  -  I think the downgrade will be a non-event. The downgrade itself doesn't make it any more likely the US will default. Effect on interest rates here - probably none i would think unless the dollar falls dramatically, then the ECB would presumably cut rates (unlikely to be a major dollar reaction - I'd say this was already partially priced in)



Looks like my assessment of a "non event" above couldn't have been more wrong


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