bearish
The US Lost Its AAA-Rating – Why It Does Matter (I)
283 Views08 Aug 2023 15:14
SUMMARY
- 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.
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