Nov 29 - In week three of the march toward the fiscal cliff, Congress and
the President have made little progress resolving the dispute on how to prevent
going over the financial precipice. Given the ideological differences between
the Democrats and the Republicans, Standard & Poor's Ratings Services does not
expect much to happen until the last few days--maybe even hours--before the Dec.
31 deadline, according to a "Capital Markets Update" just published on
RatingsDirect. (Watch the related CreditMatters TV segment of "Fiscal Cliff
Notes" dated Nov. 28, 2012.)
Despite the intense, partisan, and sometimes emotional rhetoric, the capital
markets have shown little response one way or the other. The holiday lull in
Washington probably kept markets in check as much as anything else.
Uncertainty about the fiscal cliff debate likely had been leading investors to
shift to investment-grade securities and away from high yield as a precaution,
but this past week, investments appear to have held steady.
Of course, another factor that might be keeping yields down is this week's
"Economic Outlook" from the Organization for Economic Cooperation and
Development, which forecasts weaker growth for the world's advanced economies
in 2013 and warns of the risk of a serious global recession.
The report is available to subscribers of RatingsDirect on the Global Credit
Portal at www.globalcreditportal.com. If you are not a RatingsDirect
subscriber, you may purchase a copy of the report by calling (1) 212-438-7280
or sending an e-mail to firstname.lastname@example.org. Ratings
information can also be found on Standard & Poor's public Web site by using
the Ratings search box located in the left column at www.standardandpoors.com.