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2d ago

Moody’s Downgrade Ends U.S. Triple-A Credit Rating Era

The U.S. now holds an Aa1 rating from Moody’s, citing fiscal deficits and rising debt, as Treasury yields climb and Congress debates fiscal reforms.

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Illustration: Shruti Naithani | ThePrint

Overview

  • Moody’s has downgraded the U.S. sovereign credit rating to Aa1, aligning with earlier actions by S&P in 2011 and Fitch in 2023.
  • This marks the first time in over a century that the U.S. bond market lacks a top-tier Aaa rating, reflecting concerns over fiscal sustainability.
  • 10-year and 30-year Treasury yields have risen to nearly 4.5% and 5%, respectively, signaling heightened investor caution.
  • The downgrade stems from persistently high fiscal deficits, mounting debt, and political gridlock over tax and spending policies.
  • Extraordinary measures by the Treasury to avoid a $36.1 trillion debt ceiling breach are expected to last until August 2025, as lawmakers negotiate potential reforms.