Central Bank Raises Rates

 Denmark is a member of the EU but not of the Eurozone and has its own currency, and runs its own monetary policy, of course.

Guess what? Its central bank just raised interest rates!  Yes, that’s right, it raised them from -0.75% to -0.60%  Why? Because there was some downward pressure on the krona and, much more importantly, the government faced problems in selling bonds.

As the Reuters story reports, 

“Nordea’s chief economist Helge Pedersen said the rate hike was partly due to a recent substantial widening of Danish mortgage bond spreads and the massive sell-off of these by investors. He also noted the Danish central bank had difficulty selling government bonds at its most recent auction.” (my bold)

Are you paying attention Fed and ECB? I’m sure you are...

Note that Danish government bonds are rated AAA while US are at AA+. Most of us have forgotten that the US lost its AAA rating from S&P back in 2013.  More recently, in July 2020, Fitch placed its AAA rating on negative outlook, meaning that a downgrade is coming.  Yup, let's keep piling on debt America and see what happens.... May I also remind that back in 2007-08 CMO tranches went from AAA to D in one step... Assumptions are bad business, eh?