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CHART OF THE DAY: Why S&P Should Be Ashamed Of Its Ratings

Courtesy of Joe Weisenthal of Business Insider

Yesterday we posted what we thought was the #1 reason not to fear a ratings downgrade in the US: The truth is, there just isn’t that much other AAA-rated material out there for people to jump into.

But this is even better.

Over at Stone Street Advisors@dutch_book posts this great chart from Nomura showing the average impact on 10-year yields from the entire history of sovereign AAA downgrades by S&P.

Guess what: Historically yields go lower after such an event.

As he puts it: "from the look of things every historical precedent seems to prove that an S&P AAA downgrade is the bell rung for govvie buyers to re-enter the market."

chart of the day, average sovereign debt reactions, july 2011


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