From back in May, news that Fitch was casting a very very wary eye at the USA on the debt ceiling debacle and US governance difficulties:
And now, action from the agency:
Fitch is very much the #3 rating agency behind S&P and Moody’s, but still, this is not a positive development for holders of US sovereign bonds. Some funds, for example, are mandated to only hold AAA-rated sovereign bonds.
Lets see if the bigger two agencies follow suit.
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Of more concern, I reckon, is the timing of Fitch dropping this bombshell. US regular market hours are closed. If the plan was to trigger market chaos this timing would be pretty close to the #1 option.
So far the markets that are open (hello FX traders) are relatively subdued.