Assuming rating agencies assume some (implicit) limit to fiscal deficits and debt-to-GDP ratios, even the world's deepest, liquid, and vital bond market is vulnerable to rating downgrades.
Soaring interest costs, putting the US on a trajectory of a 10% budget deficit, have prompted Fitch to take its AAA-rating.
While discussion focus on the unique status of the US Treasury Market, this downgrade touched the underlying issue, debt sustainability.
Get started on the Smartkarma Research Network with a complimentary Preview Pass to:
Unlock all research summaries
Follow top, independent analysts
Receive personalised alerts and emails
Access Briefings, Analytics, and Events
Upgrade anytime to our paid plans for full-length research, real-time analyst discussions, and more.
Join a thriving community of 45,000+ investors, including the top global asset managers managing over $13trn in assets.