Bryan Carter

The direction has been clear for so long, and many have sold on the rumour and bought on the news, however, this is not a typical downgrade, as it is part of a longer-term evolution - and it is not the last event.

The only reason the finance minister has stuck around is to prevent a downgrade, he has no reason to be there.

A risk premium has appeared over the last few weeks due to politics, bringing those deals out of kilter with the fundamentals.

It is not clear yet if the change in economic policy is being institutionalized or if it only has the lifespan of this one man in the administration.

The downgrade risk is there, the potential that Levy is dismissed is the most important risk that she needs to dispel.

Clearly the epicenter of this sell-off is Europe, bond investors are re-evaluating how rich these core (bonds) got and repositioning into higher spreads and higher yielding classes.