Stock Futures Sink on Renewed Global Debt Concerns

Standard & Poor’s downgrade of Japan’s credit rating to AA-minus on Thursday came a day after the U.S. Congressional Budget Office said the country’s budget deficit will hit a record $1.48 trillion in fiscal 2011, a chain of events that brought up the inevitable discussion about whether the U.S. is on thin ice when it comes to own gilt-edged rating.
“It will not be lost on investors and market observers that the S&P downgrade of Japan came on the heels of the U.S. nonpartisan Congressional Budget Office revised higher its deficit and debt ratio forecasts of the United States,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman, in a note. “The risk of a U.S. debt downgrade remains minimal, but could weigh on sentiment” for the dollar.