Moody's downgrade of the U.S. credit rating continues to trigger shocks in the U.S. capital markets, with &#34;Sell America&#34; trades on the rise, leading to a situation of simultaneous declines in stocks, bonds, and currencies.
On Monday, the U.S. Treasury market faced massive sell-offs, with the 30-year Treasury yield rising about 10 basis points and breaking the psychological barrier of 5% in the afternoon, reaching its highest level since mid-2007, matching the peak level of November 2023. The 10-year Treasury yield also climbed above 4.5%, reflecting investors' concerns about the long-term fiscal health of the U.S.
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Wells Fargo strategist Michael Schumacher and others in a report predicted that &#34;due to the Moody's downgrade, the yields on U.S. 10-year and 30-year Treasuries will rise another 5-10 basis points.&#34;
As uncertainty around U.S. debt issues increases, the U.S. dollar index fell by 0.35%, while traditional safe-haven currencies like the Japanese yen and Swiss franc gained support.
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U.S. stock futures also showed a clear cautious sentiment. Currently, Dow futures are down nearly 0.9%, S&amp;P 500 futures are down over 1%, and Nasdaq 100 futures are down about 1.5%.
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Additionally, gold, as a safe-haven asset, rebounded after a pullback, with spot gold prices rising above $2,440 per ounce at one point. Natasha Kaneva, head of commodity research at JP Morgan, noted in a report: &#34;Gold is benefiting from the deterioration of the U.S. fiscal situation, and this trend may continue for quite some time.&#34;
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<h2>&#34;Sell America&#34; Trading Strategy Restarted</h2>
Last week, Moody's downgraded the U.S. credit rating from the highest level of Aaa to Aa1 and adjusted the rating outlook from &#34;negative&#34; to &#34;stable.&#34; Moody's explicitly pointed out that the worsening fiscal deficit and political polarization in the U.S. are undermining the credit foundation of the world's largest economy.
Market analysts generally believe that Moody's adjustment of the rating outlook may lead investors to reassess the risk premium of U.S. assets, especially against the backdrop of the impending expiration of Trump's tax cuts and the uncertainty surrounding the fiscal policy direction of the new government.
Wall Street traders are restarting the &#34;Sell America&#34; trading strategy. BlackRock Investment Institute strategist Scott Thiel stated: &#34;The market is reassessing the long-term sustainability of U.S. debt, and Moody's warning cannot be simply ignored.&#34;
Vasu Menon, Managing Director of Investment Strategy at OCBC Bank (Singapore), pointed out that the downgrade will exacerbate &#34;growing concerns about the loss of the American exceptionalism and make non-U.S. assets more attractive to global equity investors, who have been shifting from U.S. stocks to other markets such as European stocks.&#34;
Previously, both S&amp;P in 2011 and Fitch in 2023 downgraded the U.S. rating. Looking back to August 2011, when S&amp;P first downgraded the U.S. from AAA to AA+, the market experienced a panic moment, especially as the U.S. Treasury market faced significant sell-offs. On the day of the downgrade, the 10-year U.S. Treasury faced a significant sell-off, with yields rising by 16 basis points

Moody's downgraded the U.S. rating, leading to a "triple kill" in the U.S. market for stocks, bonds, and currencies. U.S. Treasury yields soared, the three major U.S. stock index futures fell by about 1%, the U.S. dollar index declined, and safe-haven asset gold is regaining upward momentum

- Moody's downgrade of the U.S. credit rating has triggered significant turmoil in the capital markets, leading to a "sell America" trading strategy.  
- The U.S. bond market faced massive sell-offs, with 30-year Treasury yields surpassing 5%, reflecting investor concerns over long-term fiscal health.  
- Analysts predict further increases in yields, while the dollar index fell, and gold prices rose, indicating a shift towards safer assets amid growing uncertainty regarding U.S. fiscal policies.

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Moodys

"Sell America" trading headline! The yield on the 30-year U.S. Treasury bond has surpassed 5%, Nasdaq futures fell by 1.5%, and spot gold rose by 0.8%