The unprecedented though expected downgrade of the U.S. credit rating from AAA to AA+ by Standard & Poor's was proper and right, says Steen Jakobsen, Chief Economist, Saxo Bank. The timing however has had a significant impact on global financial markets and exacerbated fears about another recession looming. Investors understandably fled to the traditional safe havens - gold, the yen and the Swiss Franc. Stocks took the biggest beating while U.S. bonds barely suffered, as the downgrade is more about the willingness of the U.S. to repay its debt and manage its budget rather than its outright ability. U.S. bonds also benefitted from investors’ exit from some European counterparts following renewed concerns about the failing austerity programmes in the Eurozone's peripheral countries. As a result, the European Central Bank stepped in to ease the situation by buying struggling Spanish and Italian bonds. Meanwhile, politicians and central banks and other key authorities across the globe voiced their support for U.S. fixed income securities and maintaining overall stability, of which comments from the Group of Seven stood out the most. But where to from here? The next focus of markets is the meeting of the Federal Open Market Committee with attention placed on any hints from the Federal Reserve of further quantitative easing or comments on the growth outlook for the world's largest economy. Despite all of this raucousness the bottom line remains that more action and less talk needs to take place to ease the current market volatility.