What should we do next after the sovereign credit rating is downgraded? On Friday, Moody's downgraded the US sovereign credit rating from Aaa to Aa1, along with Fitch's first downgrade in 11 years and S&P's second downgrade in 23 years, marking the complete end of the 3A rating in the US credit era. Of course, everyone is more concerned about how much impact it has on the market? 1. Moody's downgrade this time has both positive and negative effects: the rating has been downgraded but the outlook has been adjusted from negative to stable. The reason given is that the US government's debt and interest payments continue to be too high, which is actually a well-known fact. Moreover, under the major impact from February to early April, the market has maintained a high level of vigilance against fiscal imbalances and debt risks, and even shook the cornerstone of the safety of US dollar assets at one point. Compared to the previous two times, it did not bring any updated information. After the first two rating downgrades, mainstream regulatory requirements now require the recognition of AAA and AA+, and the risk capital occupation standards for sovereign bonds are basically the same. Moreover, many contracts have modified the category of US bonds to government bonds to avoid credit interference. The significance of this downward adjustment signal is greater than its substantive meaning, delaying the confirmation of a trend that has already begun. (From this perspective, it's not a problem for Benson to say that Moody's is a lagging indicator.) From the above perspective, the impact on the market this time should be smaller than the previous two, but it does not mean that it is completely non-existent. The short-term disturbance is still significant, with significant adjustments in the first 1-2 trading days of liabilities, especially the current downward adjustment at the end of Friday, which was not fully reflected and priced in the market, especially in the US stock and bond markets. The opening of US stock futures on Monday may see an expansion in the trend towards the end of Friday. 2. However, the downgrade of tariffs in the joint statement between China and the United States on the 12th, as well as the temporary easing of market concerns about reinflation in CPI and PPI this week, personally do not feel that the situation will be very bad. My own feeling is that next week the market logic will return to tariff trade negotiations and geopolitical drivers The trade negotiation will return to the logic of "correction must be excessive" mentioned earlier. The US UK agreement last week and the Sino US joint statement on the 12th are equivalent to the achievements of the last two stages of Trump's transition. Now Trump and Besant need more achievements to consolidate the fruits of victory. Moody's downgrade and Wal Mart's announcement on Friday that it would raise prices sounded an alarm to Trump. It must actively promote negotiations again, or the market will die for you. So today, Besant saw in his speech that he urgently communicated with the CEO of Wal Mart over the weekend, saying that Wal Mart would bear part of the tariff itself, which is essentially a response to the extreme action of Wal Mart's price rise threat. Next week, the United States and Vietnam will begin ministerial level negotiations, which means that the negotiations between the United States and Vietnam have advanced to the stage of technical consultations. And as time goes by, the more positive Trump Besant will be, the worse it will be for them. The G7 account meeting scheduled for 20-22 next week is worth paying attention to, and tariff issues should be the top priority of this finance ministers' meeting. The same is true of geography. Trump talked with Putin, Zerensky and NATO members on the phone next Monday evening, presumably to further pressure and make new progress in promoting the ceasefire between Russia and Ukraine. 3. The cryptocurrency market is moving strongly today, and my personal opinion is that it cannot be fully considered a true trend before the US stock market opens tomorrow morning. The real trend should be visible a few hours after the US stock market opens tomorrow morning. I believe that the wave of fear and greed index in the US stock market, which started in mid April, has not been completely completed yet. Looking at the rapid rise of the fear and greed index in the US stock market, it is approaching the greedy position (which requires some time to grind, digest and fully absorb the positive news if it wants to reverse). This is also what we talked about a few days ago at https://(x.com)/qinba frank/status/1922884044729241702? The future risks of s=46&t=k6rimWSEbo2D2TXolYcM-A may become apparent in June and July. The data from April gave the market short-term confidence, and if one or two more trade agreements are announced, the market will fully value the benefits of trade negotiations. If the US stock market continues to weaken at the opening on Monday (continuing the trend of the end of Friday), it may drive the entire market to weaken, and there may be an opportunity for short-term gains at the right time.