The debt downgrade does nothing to impair the reserve currency status of the U.S. dollar. Given the massive short position on U.S. Treasuries, bond buyers could see a significant drop in yields and a rise in bond prices, particularly if this coincides with the onset of a recession or Fed rate-cutting cycle.

Moody’s decision to lower the rating on U.S. government debt seems unlikely to shake up the corporate bond market too much.

U.S. stocks, bonds and the value of the U.S. dollar are drifting lower on Monday following the latest reminder that the U.S government seems to be hurtling toward an unsustainable mountain of debt. Moody’s pointed to how the U.