{"id":43275,"date":"2023-08-01T22:00:01","date_gmt":"2023-08-02T02:00:01","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/25-trillion-treasury-market-is-in-the-spotlight-as-u-s-loses-its-aaa-rating-for-a-second-time\/"},"modified":"2023-08-01T22:00:04","modified_gmt":"2023-08-02T02:00:04","slug":"25-trillion-treasury-market-is-in-the-spotlight-as-u-s-loses-its-aaa-rating-for-a-second-time","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=43275","title":{"rendered":"$25 trillion Treasury market is in the spotlight as U.S. loses its AAA rating for a second time"},"content":{"rendered":"
\n

Will August 2023 be a repeat of August 2011?<\/p>\n

Fitch Ratings on Tuesday became the second major credit firm to cut the U.S. government\u2019s top AAA rates to AA+, a move that was swiftly condemned by the White House and the Treasury Department. <\/p>\n

\n

But if the past can be a guide, the big reaction in financial markets might actually be a rally in the roughly $25 trillion market for Treasury securities.<\/p>\n

\u201cThe timing is a little surprising,\u201d said Chip Hughey, managing director, fixed income, at Truist Advisory Service, in a phone call with MarketWatch on Tuesday evening. <\/p>\n

\u201cBut if we look at 2011 as a comparison, the immediate response wasn\u2019t about the ability of the U.S. to meet its debt obligations,\u201d Hughey said, but rather toward potential economic growth concerns that \u201ccreated demand for U.S. Treasurys, despite the downgrade.\u201d<\/p>\n

S&P Global Ratings downgraded the U.S. credit rating\u00a0in 2011 to AA+ from AAA, in the days after a debt-ceiling deal was reached in Washington. <\/p>\n

Fitch initially warned in May that it might pull the trigger too, in part due to \u201cbrinksmanship\u201d as the latest debt-ceiling fight remained at an impasse. It warned of the possibility again in June, after the U.S. reached a deal on its borrowing limit, with the actual downgrade following roughly a month later.<\/p>\n

See:<\/strong> U.S. AAA debt rating gets a downgrade by Fitch; White House says move \u2018defies reality\u2019<\/p>\n

Around the 2011 downgrade, the 10-year Treasury yield
\n TMUBMUSD10Y,
\n 4.032%<\/bg-quote>
\n fell from a roughly 3% rate heading into August to about 1.8% in late September, according to FactSet. <\/p>\n

\u201cWe can\u2019t say the reaction is going to mirror 2011,\u201d Hughey said. \u201cOne the one hand, we have another rating action that could potentially change the perception of U.S. creditworthiness.\u201d <\/p>\n

At the same time, the concerns that Fitch cited for the downgrade could also create anxieties in the market, driving investors to assets traditionally viewed as being a safe haven, he said.<\/p>\n

Fitch said its rating downgrade stemmed from <\/strong>\u201cexpected fiscal deterioration,\u201d a \u201chigh and growing\u201d government debt burden and an \u201cerosion of governance\u201d in the face of repeated debt-limit standoffs and other ills.<\/p>\n

Short-term Treasury bill yields climbed above 5% in April and have remained elevated, in part because the Federal Reserve has quickly raised its policy rate to tame inflation. The Fed again increased rates a week ago, bringing its policy rate to a 22-year high in a 5.25%-5.5% range.<\/p>\n

Investors have been snapping up the deluge of Treasury securities issued since the June debt-ceiling deal allowed U.S. coffers to be refilled, albeit at higher borrowing costs than in the recent past.<\/p>\n

A \u201ctsunami\u201d of additional issuance was expected after the Treasury Department released a $1 trillion borrowing estimate for the third quarter. <\/p>\n

Longer 10-year Treasury yields, used to price everything from home loans to commercial real-estate debt, were at 4.048% on Tuesday, the second-highest of 2023, according to Dow Jones Market Data.<\/p>\n

Stocks have defied expectations with a robust rally, and were trading roughly 5% off record highs. The Dow Jones Industrial Average
\n DJIA
\n was up 7.5% on the year through Tuesday, the S&P 500 index
\n SPX,
\n -0.27%<\/bg-quote>
\n was 19.2% higher and the Nasdaq Composite Index
\n COMP,
\n -0.43%<\/bg-quote>
\n was up 36.5% in 2023, according to FactSet. <\/p>\n

Related:<\/strong> Why another cut to AAA U.S. credit rating could derail the stock-market rally<\/p>\n

Moody\u2019s Investors Service still has a top Aaa rating for the U.S., with a stable outlook.<\/p>\n<\/p><\/div>\n<\/div>\n

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

Will August 2023 be a repeat of August 2011? Fitch Ratings on Tuesday became the second major credit firm to cut the U.S. government\u2019s top AAA rates to AA+, a move that was swiftly condemned by the White House and the Treasury Department. But if the past can be a guide, the big reaction in […]<\/p>\n","protected":false},"author":1,"featured_media":43276,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-43275","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\n$25 trillion Treasury market is in the spotlight as U.S. loses its AAA rating for a second time | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Will August 2023 be a repeat of August 2011? Fitch Ratings on Tuesday became the second major credit firm to cut the U.S. government\u2019s top AAA rates to\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=43275\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"$25 trillion Treasury market is in the spotlight as U.S. loses its AAA rating for a second time | iFintechWorld\" \/>\n<meta property=\"og:description\" content=\"Will August 2023 be a repeat of August 2011? Fitch Ratings on Tuesday became the second major credit firm to cut the U.S. government\u2019s top AAA rates to\" \/>\n<meta property=\"og:url\" content=\"https:\/\/ifintechworld.com\/?p=43275\" \/>\n<meta property=\"og:site_name\" content=\"iFintechWorld\" \/>\n<meta property=\"article:published_time\" content=\"2023-08-02T02:00:01+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-08-02T02:00:04+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/08\/1690941603_social.jpeg\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"640\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"News Room\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"News Room\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/ifintechworld.com\/?p=43275#article\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=43275\"},\"author\":{\"name\":\"News Room\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\"},\"headline\":\"$25 trillion Treasury market is in the spotlight as U.S. loses its AAA rating for a second time\",\"datePublished\":\"2023-08-02T02:00:01+00:00\",\"dateModified\":\"2023-08-02T02:00:04+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=43275\"},\"wordCount\":592,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"keywords\":[\"Featured\"],\"articleSection\":[\"Markets\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/ifintechworld.com\/?p=43275#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/ifintechworld.com\/?p=43275\",\"url\":\"https:\/\/ifintechworld.com\/?p=43275\",\"name\":\"$25 trillion Treasury market is in the spotlight as U.S. loses its AAA rating for a second time | iFintechWorld\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/#website\"},\"datePublished\":\"2023-08-02T02:00:01+00:00\",\"dateModified\":\"2023-08-02T02:00:04+00:00\",\"description\":\"Will August 2023 be a repeat of August 2011? Fitch Ratings on Tuesday became the second major credit firm to cut the U.S. government\u2019s top AAA rates to\",\"breadcrumb\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=43275#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/ifintechworld.com\/?p=43275\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/ifintechworld.com\/?p=43275#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/ifintechworld.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"$25 trillion Treasury market is in the spotlight as U.S. loses its AAA rating for a second time\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/ifintechworld.com\/#website\",\"url\":\"https:\/\/ifintechworld.com\/\",\"name\":\"Repay Down\",\"description\":\"Latest Personal Finance News, Tips and Updates\",\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/ifintechworld.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/ifintechworld.com\/#organization\",\"name\":\"Repay Down\",\"url\":\"https:\/\/ifintechworld.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"width\":558,\"height\":90,\"caption\":\"Repay Down\"},\"image\":{\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\",\"name\":\"News Room\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"caption\":\"News Room\"},\"sameAs\":[\"https:\/\/ifintechworld.com\"],\"url\":\"https:\/\/ifintechworld.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"$25 trillion Treasury market is in the spotlight as U.S. loses its AAA rating for a second time | iFintechWorld","description":"Will August 2023 be a repeat of August 2011? Fitch Ratings on Tuesday became the second major credit firm to cut the U.S. government\u2019s top AAA rates to","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/ifintechworld.com\/?p=43275","og_locale":"en_US","og_type":"article","og_title":"$25 trillion Treasury market is in the spotlight as U.S. loses its AAA rating for a second time | iFintechWorld","og_description":"Will August 2023 be a repeat of August 2011? Fitch Ratings on Tuesday became the second major credit firm to cut the U.S. government\u2019s top AAA rates to","og_url":"https:\/\/ifintechworld.com\/?p=43275","og_site_name":"iFintechWorld","article_published_time":"2023-08-02T02:00:01+00:00","article_modified_time":"2023-08-02T02:00:04+00:00","og_image":[{"width":1280,"height":640,"url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/08\/1690941603_social.jpeg","type":"image\/jpeg"}],"author":"News Room","twitter_card":"summary_large_image","twitter_misc":{"Written by":"News Room","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/ifintechworld.com\/?p=43275#article","isPartOf":{"@id":"https:\/\/ifintechworld.com\/?p=43275"},"author":{"name":"News Room","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61"},"headline":"$25 trillion Treasury market is in the spotlight as U.S. loses its AAA rating for a second time","datePublished":"2023-08-02T02:00:01+00:00","dateModified":"2023-08-02T02:00:04+00:00","mainEntityOfPage":{"@id":"https:\/\/ifintechworld.com\/?p=43275"},"wordCount":592,"commentCount":0,"publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"keywords":["Featured"],"articleSection":["Markets"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/ifintechworld.com\/?p=43275#respond"]}]},{"@type":"WebPage","@id":"https:\/\/ifintechworld.com\/?p=43275","url":"https:\/\/ifintechworld.com\/?p=43275","name":"$25 trillion Treasury market is in the spotlight as U.S. loses its AAA rating for a second time | iFintechWorld","isPartOf":{"@id":"https:\/\/ifintechworld.com\/#website"},"datePublished":"2023-08-02T02:00:01+00:00","dateModified":"2023-08-02T02:00:04+00:00","description":"Will August 2023 be a repeat of August 2011? Fitch Ratings on Tuesday became the second major credit firm to cut the U.S. government\u2019s top AAA rates to","breadcrumb":{"@id":"https:\/\/ifintechworld.com\/?p=43275#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/ifintechworld.com\/?p=43275"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/ifintechworld.com\/?p=43275#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/ifintechworld.com\/"},{"@type":"ListItem","position":2,"name":"$25 trillion Treasury market is in the spotlight as U.S. loses its AAA rating for a second time"}]},{"@type":"WebSite","@id":"https:\/\/ifintechworld.com\/#website","url":"https:\/\/ifintechworld.com\/","name":"Repay Down","description":"Latest Personal Finance News, Tips and Updates","publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/ifintechworld.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/ifintechworld.com\/#organization","name":"Repay Down","url":"https:\/\/ifintechworld.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","width":558,"height":90,"caption":"Repay Down"},"image":{"@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61","name":"News Room","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","caption":"News Room"},"sameAs":["https:\/\/ifintechworld.com"],"url":"https:\/\/ifintechworld.com\/?author=1"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/43275","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=43275"}],"version-history":[{"count":1,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/43275\/revisions"}],"predecessor-version":[{"id":43277,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/43275\/revisions\/43277"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/media\/43276"}],"wp:attachment":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=43275"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=43275"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=43275"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}