At the end of the day on Friday, reports said that governments official were expecting and preparing for an S&P downgrade. What's unclear is if S&P plans to cut the rating on U.S. debt to AA+ or AA from AAA.
Two government officials have told ABC News that the Obama administration expects that S&P will cut the triple-A rating. CNBC also reported that the government expects a downgrade as early as Friday evening. However, in the wake of a better-than-expected jobs report Friday, market chatter indicated the downgrade from S&P would come after the close of trading. With pushback from the Obama administration, the timing of any downgrade is now uncertain. The impact from a downgrade from any credit-ratings agency is expected to be swift and extremely damaging. Professional investors have warned that pension funds with mandates of triple-A rated holdings will be forced to sell government issues, which could trigger a surge in yields as prices plummet. There is also worry that borrowing costs will increase as the biggest holders of debt lose faith in the U.S. government and sell Treasuries. As the market sold off this week, the yield on the 10-year Treasury plunged to 2.56%, its lowest level in more than nine months. '+'
