Overview

• Moody’s downgraded U.S. sovereign debt, removing its triple-A rating and revising the outlook to stable, completing the loss of top-tier status across major agencies.
• Yields on U.S. Treasurys spiked, with 10-year yields surpassing 4.5% and 30-year yields exceeding 5% for the first time since late 2024.
• The downgrade triggered automatic sell-offs by institutional investors, intensifying market pressure and contributing to a 0.8% decline in the dollar against the euro.
• European equities and sovereign bonds saw declines, with Italy’s Piazza Affari falling up to 1.8%, reflecting global market ripples from the U.S. credit event.
• Moody’s highlighted long-term fiscal risks, projecting U.S. deficits rising to 9% of GDP by 2035 and debt reaching 134% of GDP without significant reforms.