By Daniel Bases and Ellen Freilich
NEW YORK | Tue, June 28, 2011 6: 15 p.m. EDT
NEW YORK (Reuters) - how good commercial investors from the US Treasury in the case of a downgrade rating of credit U.S. will depend less on the relocation of ratings itself and more on the prospects for long-term inflation, makers of Bank of America, Merrill Lynch said on Tuesday.
The Treasury Board has developed 2 August as the date when he will have exhausted all its emergency measures to avoid default. The Obama Administration and Congress have not yet agreed to increase the limit of 14.3 billion on how the Government can borrow.
The credit rating agencies Standard & Poor, Moody investors Service and Fitch Ratings have all the concerns voiced on the coast of U.S. debt in the absence of a long-term plan to put the country on a sustainable fiscal path to long term.
The credit rating AAA for the largest economy in the world has a symbolic value. But Jeffrey Rosenberg, head of the global strategy for the credit at the Bank of America, Merrill Lynch, said markets would assess the ability of U.S. payments in a timely manner on the capital and interests themselves.
"The market makes its assessment of price () performance, based on its own evaluation, not the rating agencies,"he told journalists at a briefing semi-annual outlook.""
"The risk of long-term credit for United States - not the debt ceiling debate that we have now - really is risk of inflation." What you see on the market is not that there is not much risk of inflation concern today, said Rosenberg.
In mid-April, Rosenberg became one of the traditional credit strategists little suggests that there may be a case for the us to allow a temporary default on its debt.
Its report on 18 April, said the temporary suspension of payments of the debt that the cost of reaching a compromise policy that brings financial viability in the long term "can lead to financial benefits in the long term more" such as the decline of long-term interest rates.
This view has gained some cachet in Washington, where some Republicans were locked on the idea of a failure to brief to force the Obama Administration to accept cuts in more significant costs in exchange for a higher debt ceiling and, ultimately, a compromise budget.
Nevertheless, BAML expected yields on reference 10 years the good United States of Treasury at the end of the year to 3.60%, lower than the 4.0% forecast earlier this year.
Ethan Harris, Chief of developed markets economic research, said he expects a last minute decision "on the United States (.) the debt ceiling." »
In the context of the political debate on the increase in the debt ceiling, a move by the rating agencies ensured that "there a little gasoline on the fire," said.
Harris has said the economy of the Japan returning from its natural and nuclear disasters and waiting that will the oil price drop, the rest "bomb waiting out there" is the debt ceiling debate.
In the negotiations, called "Fiscal Follies", the two parties could make and trigger a "moment of tarp" in violent movements market would require a set of actions.
Another scenario could be composed of modest initial reductions of debt and a two-year debt ceiling extension, a scenario which could put an end to "soft patch the economy", he said.
With a fragile economy, big upfront cuts in the federal budget would be "derail growth," Harris said.
He told Reuters that the current prospects for the US economy in the second quarter are running behind the forecast of growth of 2% of Bank of America Merrill Lynch.
"We have it at 1.7% for the second quarter, based on the latest batch of economic data.". But we have not changed the official forecast of 2 percent, month, there is a value "Harris said, adding that he does not expect the Fed to increase rates at least until September 2012."
The firm forecast of 2.4 per cent GDP growth this year and a performance of 10 years of the Treasury Board of 3.6% at year end. The rate of growth for 2012 edges up to 3.0%.
Despite this controlled growth, chances of increased monetary stimulus remains thin, strategists said.
Francisco Blanch, head of research of products, said that the firm does not believe a third phase of monetary stimulus by the purchase of goods on a large scale is likely.
"The gold back to the sum of $2,000 range - more, you will need IS3 and at the moment, we do not believe that iS3 is in the cards, which is the reason why that we have become a little more cautious in terms of prospects for gold," said Blanch.
The company has a $1,650 per ounce cyclical peak in the price of gold, while the markets remain volatile.
David Bianco, head of U.S. equity strategy, stuck with its target of 1 400 to reference year end Standard & Poor 500 index, but reiterated that he could go as high as 1,500.
Bianco has stocks of technology as an overweight in the model of the distribution of the assets of the firm. Industry, consumers, materials, financials, energy, consumption of health care and discretion are equal weight. Underweight is utility and telecommunications.
As Europe's debt crisis, Rosenberg said the risk in the credit markets that surround the current problems of the Greece were "less of a crisis in this go round" when considered in the context of the recent crises in financial markets in the course of last 4-1/2 years.
Paresh Upadhyaya, head of the Americas G10 FX Strategy, estimated that the market is too fixing the Greece and said the greatest risk of contagion to spread to the Spain.
It provides that the Parliament of the Greece to move to the next series of austerity proposed this week, but said remnants of the financial situation of this nation later settled.
I'm afraid that Greece becomes a ground hog day. It is not entirely disappear. »
(Reporting by Daniel Bases and Ellen Freilich;) (Editing by Dan Grebler)
