It seems that Moody’s downgrade of UK government bonds on Friday night has — so far — had more effect on the headlines than the markets.
After the news on Friday night, the pound fell by about a cent against the dollar, from $1.525 to $1.515. And against the euro it fell from €1.157 to €1.147 (it’s fallen a little further this morning, to €1.144). But that’s no bigger than the drop on Wednesday on the news that Mervyn King and two other members of the Bank of England’s Monetary Policy Committee had voted in favour of more quantitative easing.
And it doesn’t seem to have raised the cost of borrowing much. The yield on ten-year government bonds did rise slightly from 2.11 per cent at close on Friday to 2.17 per cent this morning, though it’s since fallen back to 2.13
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