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WHEN MOODY’S PLACED the US sovereign’s sacrosanct triple-A rating on review for possible downgrade on July 13, what had seemed an issue of minor concern a month earlier rapidly escalated into a full-blown crisis. This was fuelled further when just one day later Standard & Poor’s, which had already lowered its long-term ratings outlook to negative in April, added the US’s A-1+ short term rating to the negative watch list, noting that there was a "one-in-two likelihood that we could lower the long-term rating on the US within the next 90 days". The announcements propelled the hamstrung negotiations over the raising of the country’s debt ceiling back onto the front pages just as the eurozone sovereign debt crisis also entered a new and dangerous phase. Despite the warning shots from the rating agencies, treasuries barely flinched. If anything, rates markets appear supported by the economic prognosis and can only take heart from Federal Reserve chairman Ben Bernanke’s assurance that the Fed would reopen its quantitative easing programme should the economy require it. Notwithstanding some relatively minor movement, yields across the curve remained at annual lows by late July as global investors demonstrate their trust in the full faith and credit of Uncle Sam.