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2w ago

Moody's Downgrades U.S. Credit Rating to Aa1 Over Rising Debt and Interest Costs

The decision marks the first downgrade by Moody's in over a decade, aligning with earlier cuts by S&P and Fitch, as U.S. fiscal pressures mount.

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The downgrade comes as the Republican-controlled Congress tries to extend tax cuts from President Donald Trump's first term and add new ones.
In this file photo, Ted Zaleski discusses the book “President Garfield; From Radical to Unifier” with author C.W. “Charlie” Goodyear at Carroll Lutheran Village – Krug Chapel, Saturday July 8, 2023. Zaleski is the budget and finance director for Carroll County.
Moody's downgraded US debt on Friday

Overview

  • Moody's lowered the U.S. sovereign credit rating from Aaa to Aa1, citing a decade-long rise in debt and interest payment burdens.
  • The U.S. fiscal deficit has reached $1.05 trillion year-to-date, a 13% increase compared to the same period last year.
  • Treasury yields responded to the downgrade, with the 10-year benchmark yield rising 3 basis points to 4.48% in after-hours trading.
  • Moody's decision follows similar downgrades by S&P in 2011 and Fitch in 2023, bringing all three major agencies into alignment.
  • The downgrade reflects ongoing political gridlock in addressing large deficits and rising interest costs, with no significant fiscal reforms expected soon.