Fitch downgraded US government debt, correction move coming?

Late on Tuesday in the after hours, ratings agency Fitch downgraded the US government's top credit rating to AA+ from AAA, citing an expected fiscal deterioration over the next three years as well as a high and growing general government debt burden.

This comes two months after Democratic President Joe Biden and the Republican-controlled House of Representatives reached a debt ceiling agreement to lift the government's US$31.4 trillion debt ceiling.

US treasuries are down

As of this morning 9am (Singapore time), the US 2 year has ticked down to 4.88% from Monday's high of 4.91%, while the US 10 year is now at 4.01%, down from yesterday's high of 4.05%.

E-mini S&P Futures

The futures market is down by 0.31% but has made a green candle so far.

Is this a correction move?

Could this be the potential correction move that shakes out the weak hands before reaching all time high of 4,818 made back on Jan 4, 2022?

I have marked out potential support levels that should see some buying points for those who missed the bus.

A pullback is less than 10%, and between 10% to 20% would be a market correction, while a 20% would imply a new bear market.

Investors should take note that the last time US government debt was downgraded on Aug 5, 2011, the market fell 20% and provided investors opportunities to buy stocks on the cheap before the market made a reversal in a short span of time. Of course that cost S&P president Deven Sharma his job just a few weeks later! 

When S&P downgraded US government debt on Aug 5, 2011

I would use any weakness in the US markets to add to my collection of magnificent seven stocks like Apple, Microsoft, Meta, Alphabet & Amazon!

@CaptainTiger 

@TigerStars 

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