Global markets faced a testing time this week as continued signs of improvement in financial and economic conditions were distorted by growing concerns about the implications of soaring government debt levels.
The week’s key event for many observers was Thursday’s warning by Standard & Poor’s that the UK might lose its triple A credit rating – raising the prospect of higher borrowing costs for the British government. Ironically, although sterling and gilts wobbled, it was the dollar and Treasury bonds that came under most pressure as investors speculated that the US might suffer the same fate.
