welcome to the bloomberg surveillance newsletter a daily look at the best interviews and insights from bloomberg television and radio’s flagship morning show cohosted by tom keene jonathan ferro and me sign up here if you’re not yet a newsletter subscriber traders dont care about fitch ratings’ downgrade of the us credit rating they do care about the nation’s ballooning debt burden wall street analysts broadly dismissed fitch’s move yesterday as a nonevent that would have no effect on demand for us treasuries but they fretted about the treasury departments need to keep borrowing more and more money at a time when inflation and rates are relatively high the result potentially could be higher yields than many are prepared for “at the beginning of the year i was not in the camp that you could see fourandaquarter fourandahalf 10year notes” said morgan stanleys brian weinstein who was referring to 45 yields on the benchmark us debt issuance “but the last couple weeks has made me feel that investors should be demanding more premium in a world where inflation is more sticky growth is sticky in a good way and then you throw in some of the fiscal irresponsibility on top of it” strategas’s chris verrone sees a reason for caution in the possible convergence between a weakening bond market and other assets reacting with relative calm “you have commodities up and you have rates up and generally you have complacency here around the equity market up after a very strong start to the year” verrone said “i just would want to watch my back” he’s on alert for any shift in sentiment right now 2023’s stock rally has broadened out to cyclical names beyond the big tech leaders suggesting that investors feel comfortable with us economic growth but if there’s a rotation to defensive names while rates are still rising “that’s a different message that’s the message ‘whoa whoa whoa wait a second yields are telling us something’s about to change here’” brean capital’s john ryding was among the surveillance guests somewhat gobsmacked by fitch’s decision to jump in now months after the debtceiling deal between president joe biden and house republicans and long past the standard  poor’s rating cut that followed thenpresident barack obama’s 2011 showdown with a gopled congress “it seems about 12 years out of sync” ryding said and where fitch sees washington chaos other investors see orderly governance at least compared with much of the rest of the world according to jpmorgan chase  co’s bob michele  “we have a lot of clients who love the us markets love us markets because of the rule of law and the government” michele said “they like to see the transparency they like to see the battles on the floor”   don’t look for guidance from the options market which “in general is terrible” at making sense of geopolitical risks rbc capital’s amy wu silverman said  “right now i would say the market is nodding this off” she said “i don’t know if that changes down the line but historically the options market tends to be the worst at pricing events that are not catalysts but much more of these political overhangs” research affiliates’ rob arnott and nathan sheets of citigroup inc both cautioned that economic shifts can happen fast joblessness tends to stay steady and low into a recession sheets said right up until it crumbles  “it doesn’t send invitations beforehand saying ‘hey i’m ready to go it just goes’” sheets said “i think these dynamics could be quite abrupt” arnott noted the fed’s own struggles with 400 phd economists in forecasting inflation suggesting that there could be a “bang moment” lurking in markets perhaps around sticky inflation later this year “no one knows where the bang moment is but it’s out there” arnott said veda partners’ henrietta treyz has watched washington battles unfold both as a policy analyst and as a frontline staffer on capitol hill working in both the house and senate her first reaction to the fitch news “you have got to be kidding me” her second was skepticism about the immediate punditry on wall street and elsewhere that biden would be the biggest scapegoat for having a downgrade occur on his watch the white house certainly pushed back against that thesis history treyz said offers team biden some reason for optimism “this is not something that is as cut and dried as ‘who is the president and who gets blamed’ we saw that in 2011” treyz said that year obama squared off with a gopled congress that included eric cantor of virginia as house majority leader obama was reelected in 2012 cantor was turfed out in a republican primary less than two years later and obama was still in office when cantor’s boss speaker john boehner bailed on that job in 2015 whatever the legal peril facing donald trump after his federal indictment it can’t be untangled from the politics the former president is running again while facing charges of conspiring with others to keep the job in defiance of the 2020 election results moreover his status as the republican frontrunner tees up a likely rematch with biden “i’ve never thought biden was a shooin or anything of the kind” pangaea politics’ terry haines said today on surveillance “and i still don’t today” trump’s grip on republican voters remains strong and while the “charges are quite serious” federal prosecutors face a difficult fight in court haines said the political ground for the president is rockier too he said with house republicans getting some traction in raising doubts about biden’s involvement in the business dealings of his son hunter the federal case related to the events of jan 6 is the third against trump who also faces us prosecution over his handling of classified documents and a new york indictment in the stormy daniels hushmoney case gop voters seem not to care forget the old conventional wisdom about the impossibility of a criminal defendant campaigning for national office “it’s not out of the question that trump could win reelection and delay cases against him” agf investments’ greg valliere a frequent surveillance guest said in his daily research note “it’s not likely but it could happen talk about uncharted waters this would be a tidal wave as the country and foreign adversaries confront an unprecedented period of political instability in the us” bloomberg surveillance is live weekdays from 6 to 9 am new york time watch on bloomberg television on the terminal at tv and on youtube or listen to the show on bloomberg radio and radi from 7 to 10 am you can watch full episodes and subscribe to the bloomberg surveillance podcast check out gtv for all the charts seen on bloomberg television get bloomberg newsletters in your inbox   supply lines for daily insights into supply chains and globe trade   energy daily for a daily guide to the energy and commodities markets that power the global economy   bw daily for unique perspectives original reporting and insightful analysis from businessweek’s renowned journalists every weekday   crypto for an 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