Muni Market Prepares For "Hundreds And Hundreds" Of Downgrades Tomorrowby Tyler Durden
Aug. 07, 2011
CNN's Don Lemon Freaks Out, Ends Segment After Being Called 'Fake News'
Chelsea Clinton 'Horrified' By Detention of Six-Time Deported Illegal Alien Domestic Abuser
Fox Comedy 'The Mick' Features Underage Boys In Tub Prepping For Threesome
Denmark: Resolution Passed to Prevent Danes From Becoming a Minority
Spain: 500+ African Migrants Celebrate After Breaking Through Border Fence
While the impact on Treasurys as a result of the downgrade may be limited (after all the other side of the Atlantic is about as ugly as the US, so where could $8 trillion in marketable USTs practically go... at least for now), the same may not be said about the far smaller, $2.9 trillion municipal market, which is about to see a blanket downgrade tomorrow as S&P warned on Friday night, and of which Matt Fabian of Municipal Market Advisors earlier said that "There will be hundreds and hundreds of municipal downgrades, which will not do well to bolster investor confidence." The scary bit: "Treasuries may be able to shake off a real impact from the downgrade. Munis I'm less sure about." Indeed, with futures already trading, and most risk assets experiencing a brief knee jerk reaction on a global coordinated PPT response by the G-7, there is still little clear understanding of what will really happen to not only the traditional system but to shadow liabilities such as repos and money markets. And munis are just one part of all of this. So what will happen if tomorrow the muni market starts unravellling, as Whitney, among so many others, has predicted? For that we turn to JP Morgan's Peter DeGroot for some quick observations.