The reaction to the Moody’s downgrade couldn’t have been worse | Forexlive

No one cares about the deficit.

Today, Trump is on Capitol Hill speaking with Republicans and trying to push forward his budget bill. Yet he singled out one single Republican holdout: Thomas Massie and called for him to be voted out of office.

Massie’s sin? He wants to see real deficit reduction.

Several other reports said that in the meeting, Trump told Republicans: “don’t f*ck around with Medicaid”

Previously, that had been the lever to pull for at least some offsets to the deficit. I think that comment has pushed up yields and — in particular — gold.

Now Moody’s downgrade certainly wasn’t ahead of the curve or telling us anything we don’t already know but it was an opportunity to rally the deficit hawks and change course, or at least nudge it in a more-responsible direction. Instead, it’s full-steam ahead on forever deficits with no credible path towards improvement.

US 30-year yields bounced off 5% yesterday but are now up 3 bps to 4.97% today.

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