Fitch and S&P have already downgraded the US and now Moody’s has taken a step in that direction. The credit ratings agency maintained the USA’s top Aaa rating but changed its outlook to ‘negative’.
- Downside risks to the US’ fiscal strengths have increased and may no longer be fully offset by the sovereign unique credit strengths
- Expects that the US’ fiscal deficits will remain very larger, significantly weakening debt affordability
- Sees US debt affordability to decline further, steadily and significantly, to very weak levels vs other highly-rated sovereigns
- Political polarization in Congres raises risk successive govt not able to reach consensus on plan to slow decline in debt affordability
- US can carry a higher debt burden than other countries
The current US funding package goes until November 17 (next Friday) and I strongly suspect that will underscore some of the concerns from Moody’s.
This article was written by Adam Button at www.forexlive.com.