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When rating agencies downgrade the US credit rating or when the US 5-year bond yield exceeds 5%, both events send powerful signals to the financial markets — and usually not in a positive way. Here’s how markets typically react to each situation
🔻 1. US Credit Rating Downgrade
🚨 What it signals:
• Reduced confidence in the U.S. government’s ability to manage its debt or budget.
• Perception...
When rating agencies downgrade the US credit rating or when the US 5-year bond yield exceeds 5%, both events send powerful signals to the financial markets — and usually not in a positive way. Here’s how markets typically react to each situation
🔻 1. US Credit Rating Downgrade
🚨 What it signals:
• Reduced confidence in the U.S. government’s ability to manage its debt or budget.
• Perception...
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$WeRide (WRD.US)$ gosh, its bleeding non stop.. what is wrong with this counter...
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$Nasdaq Composite Index (.IXIC.US)$ why drop
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$WeRide (WRD.US)$ Today's drop was expected; it can be a good opportunity to buy low and hold.
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$WeRide (WRD.US)$ Hold on to it until it goes back above 20 yuan.
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Last week, the S&P 500 (SPX) finished in the green for five consecutive trading days, reaching near the resistance zone around 5950. While the index is moving up, we observed a weakening in the bullish momentum at the individual stock level, particularly among some leading stocks where the Bid momentum appears insufficient. Considering this situation, we have recommended trimming profitable positions this week, while establishing hedge positions on Thursday to address potential market risks.
After the market closed on Friday, Moody's downgraded the USA sovereign credit rating from the highest Aaa to Aa1, marking the first time since the downgrades by S&P in 2011 and Fitch in 2023 that all three major rating agencies have collectively downgraded the USA credit rating. This reflects market concerns about the fiscal path of the USA, which may impose pressure on market sentiment and further strengthens our recommendation to establish hedge positions.
Russell 2000
IWM fell back over the last two days after reaching around 209.6 in the past two or three days, and on Friday it climbed back above 209.6. Notably, IWM has been hovering above the 8-day moving average, and Friday's volume showed an increase. The bottoms on Thursday and Friday have continued to rise, and there has been no filling of the lower gap in five days. However, throughout the entire Candlestick ascension, there has been no obvious pullback, suggesting sustained overextension. Additionally, the event of Moody's downgrading the USA's sovereign credit rating after hours on Friday necessitates attention to market dynamics before Monday's trading. If market sentiment suddenly shifts, it may lead to the lower gap being filled.
After the market closed on Friday, Moody's downgraded the USA sovereign credit rating from the highest Aaa to Aa1, marking the first time since the downgrades by S&P in 2011 and Fitch in 2023 that all three major rating agencies have collectively downgraded the USA credit rating. This reflects market concerns about the fiscal path of the USA, which may impose pressure on market sentiment and further strengthens our recommendation to establish hedge positions.
Russell 2000
IWM fell back over the last two days after reaching around 209.6 in the past two or three days, and on Friday it climbed back above 209.6. Notably, IWM has been hovering above the 8-day moving average, and Friday's volume showed an increase. The bottoms on Thursday and Friday have continued to rise, and there has been no filling of the lower gap in five days. However, throughout the entire Candlestick ascension, there has been no obvious pullback, suggesting sustained overextension. Additionally, the event of Moody's downgrading the USA's sovereign credit rating after hours on Friday necessitates attention to market dynamics before Monday's trading. If market sentiment suddenly shifts, it may lead to the lower gap being filled.
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$WeRide (WRD.US)$ I bought it and it started to fall
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$Direxion Daily Semiconductor Bear 3x Shares ETF (SOXS.US)$ In fact, there was already a Bearish situation on Friday; the beautiful bill was surprisingly not passed by the Republican majority in Congress… This bill contains not only tax issues but also the debt ceiling problem of USA.
It seems that the proportion of loyalists is not high enough, but still Bullish about the beautiful bill passing in the end, as these Congress representatives are mostly waiting to sell at a price. This weekend, the special president's staff will be busy working to persuade each one.![]()
This downgrade is different from the one in 2011. At that time, US Treasuries triggered forced selling, and this downgrade was from the last of the three credit agencies, while the other two had downgraded to AA+ long ago. The USA was recognized as AA+ in the bond market early on, and this time it simply stayed firmly at AA+. This is similar to an Analyst reiterating a Sell rating on a particular Stock while lowering the Target Price. Removing the previous post and rewriting it, since I am a knowledge blogger, I will not provide specific movements in the Large Cap. This is purely educational. Will this Bearish news really cause such panic? The first downgrade happened in 2011, which nearly caused a circuit breaker, and the second downgrade was on August 1, 2023. On August 2, after the Large Cap dropped by 1.32%, there were still subsequent drops, totaling a decline of 200 points over 10 trading days (Note that August generally sees a dip; last August, NVIDIA dropped from 130 to 90). Those who resonate with my thoughts might see where the Large Cap will pullback.
It seems that the proportion of loyalists is not high enough, but still Bullish about the beautiful bill passing in the end, as these Congress representatives are mostly waiting to sell at a price. This weekend, the special president's staff will be busy working to persuade each one.
This downgrade is different from the one in 2011. At that time, US Treasuries triggered forced selling, and this downgrade was from the last of the three credit agencies, while the other two had downgraded to AA+ long ago. The USA was recognized as AA+ in the bond market early on, and this time it simply stayed firmly at AA+. This is similar to an Analyst reiterating a Sell rating on a particular Stock while lowering the Target Price. Removing the previous post and rewriting it, since I am a knowledge blogger, I will not provide specific movements in the Large Cap. This is purely educational. Will this Bearish news really cause such panic? The first downgrade happened in 2011, which nearly caused a circuit breaker, and the second downgrade was on August 1, 2023. On August 2, after the Large Cap dropped by 1.32%, there were still subsequent drops, totaling a decline of 200 points over 10 trading days (Note that August generally sees a dip; last August, NVIDIA dropped from 130 to 90). Those who resonate with my thoughts might see where the Large Cap will pullback.
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