Developments relating to the US economy last week have significantly increased uncertainty about its prevailing condition. A sharp fall in US equity markets on Thursday was followed by a downgrade in the long-term US sovereign rating by rating agency Standard & Poor’s from AAA to AA+ with negative outlook on Friday. Two other rating agencies, Moody’s and Fitch, had recently maintained their AAA rating, but suggested that this could change.  The downgrade has raised concerns of continuing turmoil in global financial markets, as investors re-allocate portfolios in response to heightened risk perceptions stemming from both developments.