{"id":12409,"date":"2023-11-11T00:14:04","date_gmt":"2023-11-11T00:14:04","guid":{"rendered":"https:\/\/infundpros.com\/business\/moodys-lowers-outlook-on-us-debt-to-negative\/"},"modified":"2023-11-11T00:14:04","modified_gmt":"2023-11-11T00:14:04","slug":"moodys-lowers-outlook-on-us-debt-to-negative","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=12409","title":{"rendered":"Moody\u2019s lowers outlook on US debt to \u2018negative\u2019"},"content":{"rendered":"<div>\n<p>Stay informed with free updates<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Simply sign up to the <!-- -->US economy<!-- --> myFT Digest &#8212; delivered directly to your inbox.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=226b4ebc-f405-4e03-8b40-44cd9fbb69d0&amp;concept-id=6aa143a2-7a0c-4a20-ae90-ca0a46f36f92\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>Moody\u2019s has lowered its outlook on the US\u2019s credit rating to \u201cnegative\u201d from \u201cstable\u201d, pointing to a sharp rise in debt servicing costs and \u201centrenched political polarisation\u201d.<\/p>\n<p>In a Friday update, the rating agency said that the change to its outlook reflected increasing downside risks to the US\u2019s fiscal strength, which \u201cmay no longer be fully offset by the sovereign\u2019s unique credit strengths\u201d.<\/p>\n<p>Moody\u2019s added that the drastic rise in Treasury yields this year \u201chas increased pre-existing pressure on US debt affordability\u201d. It added that \u201cin the absence of policy action, [it] expects the US\u2019s debt affordability to decline further, steadily and significantly, to very weak levels compared to other highly rated sovereigns\u201d.<\/p>\n<p>The Federal Reserve has raised interest rates from near zero in March last year to a range of between 5.25-5.5 per cent in a bid to curb inflation. That aggressive campaign of monetary policy tightening has helped to push up benchmark borrowing yields.<\/p>\n<p>In addition to a steep increase in interest costs, Moody\u2019s also highlighted political dangers \u2014 pointing to \u201can increased risk that political divisions could further constrain the effectiveness of policymaking by preventing policy action that would slow the deterioration in debt affordability\u201d.<\/p>\n<p>The US Congress descended into turmoil last month after the Republican Speaker of the House of Representatives was voted out of his role after striking a deal with Democrats to continue funding the government. <\/p>\n<p>However, the short-term deal struck then will expire in one week unless a new agreement is reached, forcing the federal government to shut down some operations and furlough some non-essential workers. A deal to avert that outcome remained distant on Friday.<\/p>\n<p>A change in a rating agency\u2019s outlook can, but does not always, precede a downgrade in a credit rating. Moody\u2019s on Friday reaffirmed the US\u2019s triple A rating, reflecting the agency\u2019s view \u201cthat the US\u2019s formidable credit strengths continue to preserve the sovereign\u2019s credit profile.\u201d<\/p>\n<p>Moody\u2019s is the only of the three big credit rating agencies that still awards the US a pristine triple-A credit designation. Fitch in August announced that it had downgraded the US from a triple A to a double A plus, two months after the country narrowly averted a sovereign default over a fight to lift its borrowing limit. Political brinkmanship over the debt ceiling was also the reason for S&amp;P\u2019s credit downgrade of the sovereign in 2011.<\/p>\n<p>\u201cWhile the statement by Moody\u2019s maintains the United States\u2019 AAA rating, we disagree with the shift to a negative outlook,\u201d said Wally Adeyemo, deputy Treasury secretary. \u201cThe American economy remains strong, and Treasury securities are the world\u2019s pre-eminent safe and liquid asset.\u201d \u00a0<\/p>\n<p>Adeyemo added that the administration had \u201cdemonstrated its commitment to fiscal sustainability, including through the more than $1tn in deficit reduction included in the June debt limit deal\u201d, as well as president Joe Biden\u2019s budget proposals to reduce the deficit over the next decade.<\/p>\n<p>White House spokesperson Karine Jean-Pierre laid responsibility for the outlook shift to the behaviour of Republicans in Congress. <\/p>\n<p>\u201cMoody\u2019s decision to change the US outlook is yet another consequence of Congressional Republican extremism and dysfunction,\u201d Jean-Pierre said, who accused the party of \u201cholding the nation\u2019s full faith and credit hostage\u201d. <\/p>\n<p>There was little immediate market reaction to the news.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/226b4ebc-f405-4e03-8b40-44cd9fbb69d0\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Stay informed with free updates Simply sign up to the US economy myFT Digest &#8212; delivered directly to your inbox. Moody\u2019s has&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-12409","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Moody\u2019s lowers outlook on US debt to \u2018negative\u2019 | inFundPros<\/title>\n<meta name=\"description\" content=\"Stay informed with free updatesSimply sign up to the US economy myFT Digest -- delivered directly to your inbox.Moody\u2019s has lowered its outlook on the\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/infundpros.com\/?p=12409\" \/>\n<meta property=\"og:locale\" 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