{"id":17805,"date":"2023-06-03T19:15:54","date_gmt":"2023-06-03T23:15:54","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/fitch-says-it-may-still-cut-aaa-u-s-credit-rating-despite-debt-ceiling-deal\/"},"modified":"2023-06-03T19:15:55","modified_gmt":"2023-06-03T23:15:55","slug":"fitch-says-it-may-still-cut-aaa-u-s-credit-rating-despite-debt-ceiling-deal","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=17805","title":{"rendered":"Fitch says it may still cut AAA U.S. credit rating despite debt-ceiling deal"},"content":{"rendered":"
\n

Fitch Ratings on Friday said a debt-ceiling deal that will avert a first-ever federal default doesn\u2019t guarantee the U.S. government will keep its AAA credit rating.<\/p>\n

Fitch, in a statement, said the U.S. remained on rating watch negative \u201cas we consider the full implications of the most recent brinkmanship episode and the outlook for medium-term fiscal and debt trajectories.\u201d<\/p>\n

\n

Fitch put the U.S. on negative watch on May 24, citing concerns over the protracted debt-ceiling battle. The Senate late Thursday passed legislation to raise the debt ceiling, sending it to President Joe Biden for his signature. Biden was expected to sign the bill as early as Saturday and was slated to address the nation about the legislation Friday evening.<\/p>\n

See also:<\/strong> Here\u2019s how the debt-ceiling deal can hurt stock prices while disrupting the bond market<\/p>\n

Treasury Secretary Janet Yellen had warned that the government could run out of the ability to pay its bills by Monday if the debt ceiling wasn\u2019t raised. The debt-ceiling was raised after weeks of tense negotiations between the White House and congressional Republicans. The agreement keeps nondefense spending roughly flat in the 2024 fiscal year, increasing it by 1% the following year, and suspending the debt limit until January 2025.<\/p>\n

\u201cReaching an agreement despite heated political partisanship while reducing fiscal deficits modestly over the next two years are positive considerations,\u201d the ratings firm said. \u201cHowever,\u00a0Fitch\u00a0believes that repeated political standoffs around the debt-limit and last-minute suspensions before the x-date (when the Treasury\u2019s cash position and extraordinary measures are exhausted) lowers confidence in governance on fiscal and debt matters.\u201d<\/p>\n

Fitch said the U.S. rating is supported by \u201cexceptional strengths,\u201d including the size of the economy, high gross domestic product per capita and a \u201cdynamic business environment.\u201d<\/p>\n

The U.S. dollar is the world\u2019s pre-eminent reserve currency, which gives the government unparalleled financing flexibility, the firm said, but worried that \u201c[s]ome of these strengths could be eroded over time by governance shortcomings.\u201d<\/p>\n

Fitch said it intended to resolve the negative watch in the third quarter of this year with the \u201ccoherence and credibility of policy-making, as well as the expected medium-term fiscal and debt trajectories\u201d serving as key factors in its assessment.<\/p>\n

Stock-market investors weren\u2019t fazed by the warning, with the Dow Jones Industrial Average
\n DJIA,
\n +2.12%<\/bg-quote>
\n jumping 701.19 points, or 2.1%, on Friday, while the S&P 500
\n SPX,
\n +1.45%<\/bg-quote>
\n rallied 1.1% and the Nasdaq Composite
\n COMP,
\n +1.07%<\/bg-quote>
\n advanced 1.1%.<\/p>\n

Also read:<\/strong> The 60:40 portfolio is up more than 17%. Why is it doing so much better this year?<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Fitch Ratings on Friday said a debt-ceiling deal that will avert a first-ever federal default doesn\u2019t guarantee the U.S. government will keep its AAA credit rating. Fitch, in a statement, said the U.S. remained on rating watch negative \u201cas we consider the full implications of the most recent brinkmanship episode and the outlook for medium-term […]<\/p>\n","protected":false},"author":1,"featured_media":17806,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-17805","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nFitch says it may still cut AAA U.S. credit rating despite debt-ceiling deal | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Fitch Ratings on Friday said a debt-ceiling deal that will avert a first-ever federal default doesn\u2019t guarantee the U.S. government will keep its AAA\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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