Usually the Dagong ratings are largely a sideshow. This time people have reacted and whilst this might appear to be part of a larger movement of China sabre rattling there is likely more to it.
The reaction? A falling dollar. This will boost certain asset classes which I will talk about in a later post.
Chinese ratings agency downgrades U.S. [Chicago Tribune]
China's Dagong Global Credit Rating cut its credit rating for United States debt by one notch to A-minus from A on Thursday, saying a deal struck by Congress to raise the borrowing ceiling failed to solve the cause of its debt problem.
Dagong's ratings are barely watched outside of China, and major international credit agencies classify most countries very differently from the Chinese agency. Its views do not necessarily represent the Chinese government's stance, however, its analysis often runs in tandem with remarks from government officials.