Moody’s credit rating agency reduced the Credit rating of the United States government from AAA to AA1, citing the increasing national loan, citing the primary driver behind the reduction in credit as a primary driver.
As of 16 May Announcement From the rating agency, US lawmakers have failed to stem annual deficit or reduce spending in years, leading to A Rising national debtRating agency wrote:
“We do not believe that compulsory expenses and deficit material will result in results from existing fiscal proposals under consideration on multi-year shortage. In the next decade, we hope that the expenses entitled as a large deficit will increase while government revenue remains widely flat.”
Credit downgrade is only one degree in the 21-pay rating scale used by the company to assess the credit health of a unit.
Despite the negative short from the medium-term credit outlook, Moody maintained a positive attitude on the long-term health of the United States, citing its strong economy and the status of the US dollar Global reserved currency As strength, reflecting “balanced” borrowed risks.
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Investors react to Moody’s American Credit Amendment
Moody’s declaration attracted mixed reactions from investors and market participants, causing many unrelated to the agency’s revised approach.
Gabor Gurback, CEO and founder of Crypto Loyalty Rewards Company Pointsville, cited the previous credit assessment of the rating agency during the time of financial stress, which was incredible, indicating that the approach was very optimistic.
“This is the same moody that gave the AAA rating to the sub-prime mortified securities, which created a financial crisis of 2007-2008,” the executive has written in an X on 17 May. Post,
However, macroeconomic investor Jim Bianco argued that recently Moody’s credit outlook does not reflect a real downgrade in the notion of the credit of the US government and Speciality Announcement as “nothing burger”.
The US government’s loan crossed the $ 36 trillion in January 2025 and showed no signs of slowing down despite the recent efforts by Elon Musk and others. Reduce federal expenses And curb national loan.
As the loan climbs and investors lose confidence in the securities of the US government, the yield of bonds will increase, which will increase the loan service payment, allowing the national loan to be carried forward.
This creates a vicious cycle as investors will sometimes have to woo with higher yields to encourage them to purchase government loans.
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