Shane Oliver Economist and Head of Investment Strategy at AMP...

Shane Oliver Economist and Head of Investment Strategy at AMP quoted prior to downgrade of US:

"A ratings downgrade would probably have less impact on US
borrowing costs than feared. The experience of other countries
downgraded from AAA to AA suggests just a 0.2% rise in long-term
bond yields; forced selling of US bonds is likely to be limited as
most investors can still hold AA-rated debt as it?s still investment
grade; the uncertainty involved in the economic outlook would
likely see continued safe-haven buying of bonds; and if US bond
yields do back up too much it?s likely the US Federal Reserve (Fed)
will start buying them again (via a third round of quantitative
easing, i.e. QE3). Certainly, talk of a downgrade is not presently
worrying bond investors as US 10-year bond yields have fallen
to just 2.6% from 3.7% in February.
While a ratings downgrade may not be a disaster for the US,
the debt ceiling debate and talk of a downgrade has focused
attention on America?s public debt problems and brought
forward momentum for fi scal austerity at a time when the US
economy is fragile. This in turn has adversely affected business
and consumer confidence".

Link: http://www.ampcapital.com.au/K2DOCS/site_ampci/89A2F6B6-7B2D-4EB3-9667-A40EC256B105/2011-Aug-05-Olivers-Insights-Slumping-global-share-markets-and-debt-debacles.pdf?DIRECT