Global markets are on a downward slide. Stock markets across the globe are either falling sharply (indices in New York, London, Paris & Frankfurt are falling sharply as of writing this piece), or have closed lower (indices in Japan & Hong Kong).

Meanwhile, Spanish and Italian long-term bonds are yielding their record highest – indicating a lack of faith in their sovereign debt by creditors. Also, gold prices have hit a record high, being considered the lone safe investment now.

Having woken up from the keen focus on the US debt limit issue, global markets are now focusing on the general health of the global economy. The poor health of the US economy (slow service sector growth and falling factory order statistics being indicative), the ‘unbailably’ large economies of Spain and Italy, unrest  & uncertainty in the Middle Eastern nations – are all compounding the concerns of investors and markets across the globe.

Meanwhile, credit rating agencies Moody’s and Fitch have maintained their AAA rating for the US, albeit with a negative outlook on the ratings. The harsher S&P has not yet released their ratings. On the other hand, Dagong Global Credit Rating Company, China’s leading credit rating agency, has downgraded the US to A from A+ (which was, itself, a downgrade in Nov 2010). With the “Big Three” raters coming into frequent criticisms recently, rating agencies from developing economies are now gaining a stronger voice.

Overall, all these developments are signs of tougher times to come.