- Category: Dominoe #7 - Foreign Investors Pull Out
U.S. stock-index futures and European equities fell while gold and the Swiss franc climbed to records after President Barack Obama and Congress failed to reach a deal on raising the debt ceiling. Treasuries declined.
"Stock markets around the globe will look to price in a greater uncertainty premium on account of political squabbles in the world's largest economy and the increasing risk that it may lose its sacred AAA rating," Mohamed A. El-Erian, chief executive officer and co-chief investment officer at Pacific Investment Management Co., wrote in an e-mail. His firm manages the world's biggest bond fund. "A last-minute political compromise will avoid a default but will leave the AAA rating extremely vulnerable," he said.
Source: Bloomberg, July 25, 2011