Global economy now has its own ‘Three-Body Problem’

TOKYO – Analysts at Fitch Ratings have been a busy bunch in recent months warning of debt landmines in the two biggest economies.

First, there was the rating company’s decision to downgrade the US last August, revoking Washington’s coveted AAA status. Now its move to lower its outlook on China’s credit standing is making fresh headlines.

The same day Fitch warned about Beijing’s “more uncertain economic prospects amid a transition away from property-reliant growth to what the government views as a more sustainable growth model,” the Japanese yen fell past 152 to the dollar, the lowest in 34 years. The yen’s trajectory is upending market dynamics everywhere.