Moody’s The qualifications reduce the sovereign credit qualification of the United States to a notch for AA1 of AAA, the highest possible, citing the growing burden of financing the federal government budget deficit and the increase in the cost of shooting in the existing debt in the midst of high interest rates.
“This reduction of a sample in our qualification scale of 21 notch reflects the increase in more than a decade in government debt and interest payment rates at levels significantly that the rating sovereigns similarly,” said the qualification agency that Saidy Saidy Saidy.
It would be expected that the decision to reduce the credit profile of the United States, on the sidelines, increases the performance that investors demand to buy the United States Treasury debt to reflect more risks, and could sentence Townard to have US assets, including shares. That said, all the main continuous credit rating agencies to give the United States its second highest warning.
Performance at the point of reference 10 -year Treasury Note It rose 3 basic points in trade off hours, quoting 4.48%. He Ishares more than 20 years ETF of the Treasury Treasury – A proxy for the longest debt prices: approximately 1% fell in the negotiation after the hours, while the SPDR S&P 500 ETF Trust That tracks the reference index for US actions fell 0.4%.
Moody’s had a leg loss to keep the sovereign debt of us in the highest possible credit rating, and puts the 116 -year -old agency online in its rivals. Standard & Poor’s degraded the United States to AA+ of AAA in August 2011, and the Fitch rating also reduced the qualification of the United States to AA+ of AAA, in August 2023.
“The successive administrations and the United States Congress have not agreed to revert the trend of large annual tax deficits and growing interest costs,” Moody’s analysts said in a statement. “We do not believe that several years material reductions in mandatory spending and deficits will result from current tax proposals under consultation.”
Massive deficit
The United States is executing a massive budget deficit as the interest costs for treasure debt continued to increase due to a combination of higher rates and more main debt to finance. The fiscal deficit in the year that is October 1 is already executed at $ 1.05 billion, 13% higher than a year ago. Rate income helped some of the imbalance last month.
In their statement that accompanies the reduction, Moody’s analysts wrote that “if the 2017 tax cuts and jobs law extends, which is our base case, will add about $ 4 billion to the fiscal fiscal fiscal deficit (excluding interest payments) over the next one.”
“As a result, we hope that federal deficits will be extended, reaching almost 9% of GDP by 2035, compared to 6.4% in 2024, mainly driven by higher payments of interest on debt, increased rights spending and relatively low income generation,” Saint de Moody. “We anticipate that the federal debt load will increase to approximately 134% of GDP by 2035, compared to 98% in 2024”.
The Moody’s reduction occurred when the Budget Committee of the House of Representatives led by the Republican Party on Friday rejected a tax reduction package as part of the economic agenda of President Donald Trump, including the extension of tax cuts promulgated for the first time in 2017.
‘Less demand’
“The treasurers are still dealing with the fundamental factor of less foreign demand for them and the growing size of the debt battery that must be constantly refinant will not change, but [Moody’s] It is symbolic in the sense that there is an important qualification agency that calls for the United States and deficits, “said Peter Bockvar, Investment Director of Bleakley Financial Group.
At the beginning of April, the treasure yields rose and the dollar weakened against their world counterparts in Trump reaction that impose high rates for imported goods that enter the United States, a sign that investors could begin to move Asfest.
“This will make next week interesting,” wrote Fred Hickey, an observer of technological actions and editor of the high -tech strategist in Nashua, New Hampshire wrote in X, qualifying The Moody’s Rehad to “Bombshell from Friday afternoon (post close).” He said he expected the value of the bonds and the dollar and the price of gold to increase, in response.
The Moody official described the American bonds in 1993 for the first time, but had assigned a “field roof rating” or AAA in the United States since 1949.
-With additional reports from Christina Cheddar-Berk of CNBC and Scott Schnipper
