U.S. Treasury Secretary Scott Bessent downplayed concerns, saying that the Trump administration is working to cut spending and drive economic growth. Wells Fargo & Co. strategists expect 10- and 30-year U.S. Treasury yields will rise by another...
U.S. Treasury Secretary Scott Bessent downplayed concerns, saying that the Trump administration is working to cut spending and drive economic growth.
Wells Fargo & Co. strategists expect 10- and 30-year U.S. Treasury yields will rise by another 5 to 10 basis points due to Moody's rating downgrade.
Moody’s downgraded its US sovereign credit rating. Affected by this, the US dollar weakened on Monday (May 19), U.S. stock index futures fell and gold prices rose.
After Fitch and S&P Global, the three major rating agencies have not ranked U.S. sovereign credit at the highest level. Moody's currently gives the United States a "stable" rating outlook, and in 2023 it downgraded its outlook from "stable" to "negative".
After the U.S. closed its market last Friday (16th), the international credit rating agency Moody's announced that it would lower the U.S. sovereign credit rating from the highest "Aaa" to "Aa1", citing the increasing fiscal deficit in the United States and the heavy federal debt burden. This move has caused concerns about the fiscal outlook of the United States and increased risk aversion sentiment.
Charu Chanana, chief investment strategist at Saxo Markets, Singapore, pointed out: "This downgrade is mainly symbolic and will not immediately bring about fundamental changes. But at a time when debt and deficit issues are the focus, this will still shake market confidence and may be politicized."
In Asia, investors are waiting for the latest batch of retail sales and industrial production data in China to assess the growth momentum of the world's second largest economy. Previously, China reduced its holdings of U.S. bonds in March, and the UK surpassed China to become the second largest overseas holder of U.S. bonds.
Moody's said: "Although we recognize the economic and financial strength of the United States, these advantages are no longer enough to offset the deterioration of fiscal indicators."
As of 11:01 am Singapore time, the US S&P 500 and Nasdaq 100 index futures fell 0.84% and 1.1% respectively. Gold futures rose 1.3% to $3,229 per ounce (S$4,192). The yield on U.S. Treasury has not changed much, with a 10-year period of 4.5%.
