Morning from Copenhagen ahead of a big week.

I was coincidentally sitting in front of the screens when Moody’s announced its downgrade of the US late in the Friday session, and the timing was admittedly peculiar—with just 5–10 minutes left of futures trading before the closing bell.

Back in August 2023, when Fitch downgraded the US, it did spark a mild risk-off environment, with the long end of the yield curve continuing its upward trend.

We’re seeing something similar this morning, but there are key differences from the 2023 environment worth noting—both in relation to the USD (which gained on a trend basis in 2023, but likely won’t this time) and in how bonds are impacting cross-asset markets. Most importantly, correlations have in many ways flipped, which could significantly alter the conclusions drawn in the coming trading sessions.

Chart of the week: What happened in risk assets and bond yields after the 2023 downgrade