A global sovereign crisis

The summer of turmoil in the eurozone sovereign markets coincided with ill-tempered and highly political wrangling over the US debt ceiling and the dramatic decision by rating agency Standard & Poor’s to downgrade US treasuries from triple-A to double-A plus. Euromoney visited several banks and money managers in Manhattan on the day that the debt ceiling was due to be breached and the US long bond, in the words of one, "went nuts". "The long bond never normally moves like this," agreed Ajay Rajadhyaksha, head of US fixed-income strategy at Barclays Capital during our visit. "It is up three points in a day. That is unheard of."