It’s business-as-usual for Warren Buffett’s Berkshire Hathaway after Fitch Ratings’ downgrade of the US.
“Berkshire bought $10 billion in US Treasuries last Monday. We bought $10 billion in Treasuries this Monday. And the only question for next Monday is whether we will buy $10 billion in 3-month or 6-month” T-bills, Buffett said on CNBC. “There are some things people shouldn’t worry about,” he said. “This is one.”
Fitch cut the US’s sovereign rating to AA+ from AAA earlier this week, citing the nation’s growing deficit and increasing political brinkmanship around the periodic efforts needed to raise the debt ceiling. The timing was apt — less than 24 hours later, the government boosted its quarterly borrowing plans for the first time in two-and-a-half years.
While markets reacted moderately in the aftermath of the downgrade, long-end Treasuries are poised for their worst week this year. That’s because the move came at the same time as greater US bond issuance, adjustment from the Bank of Japan on their control over domestic yields and strong US jobs data, hitting demand for US debt.
This article was provided by Bloomberg News.