Wall Street is bracing for the potential demise of an old regime: The U.S. government\u2019s coveted AAA credit ratings.<\/p>\n
Earlier controversies on Capitol Hill over the U.S. debt limit prompted downgrades by S&P Global in 2011 and Fitch Ratings in August to AA+ from AAA, leaving Moody\u2019s Investors Service as the only major credit-rating firm applying its top credit ratings to the U.S. But perhaps not for long. <\/p>\n
\n
The dramatic end on Tuesday of Republican Rep. Kevin McCarthy\u2019s short-lived run as U.S. House Speaker has Wall Street on edge about the threat of yet another government shutdown, potentially in mid-November, when a 45-day temporary spending bill is set to run out.<\/p>\n
Another shutdown would cast doubt on the ability of the U.S. to retain its last batch of unblemished credit ratings, a go-to gauge of its trustworthiness on the global stage. It also could further rattle the roughly $25 trillion U.S. Treasury market, where yields recently surged to a 16-year high. <\/p>\n
See<\/strong>: Rising Treasury yields are upsetting financial markets. Here\u2019s why.<\/p>\nMoody\u2019s warned in late September that a government shutdown \u201cwould be a credit negative for the U.S. sovereign.\u201d The rating firm also said \u201cintensifying political polarization\u201d was a concern, as well as fiscal policy-making that\u2019s \u201cless robust\u201d in the U.S. than in many of its AAA-rated peers, including Germany and Canada.<\/p>\n
McCarthy was ousted after he relied on House Democrats to pass a last-ditch effort to thwart a partial government shutdown. The problem is, the \u201ccontinuing resolution\u201d buys only so much time. <\/p>\n
Amar Reganti, a fixed-income strategist for Hartford Funds, said the guidance Moody\u2019s gave ahead of the stopgap funding measure echoed language used a decade ago by S&P Global in its downgrade, which could signal its readiness to pull the trigger on a U.S. downgrade if a shutdown comes to pass.<\/p>\n
\u201cThat AAA rating could be at risk,\u201d Reganti said. <\/p>\n
He said Moody\u2019s, like S&P Global, may be placing less focus on the sustainability of U.S. debt, which has now topped $33 trillion, than on dysfunction in the \u201cdecision-making process\u201d of elected officials. Moody\u2019s declined to comment.<\/p>\n
Fitch weighs in <\/h2>\n
S&P Global in 2011 said policy-making had become \u201cless stable, less effective and less predictable\u201d than previously believed. <\/p>\n
The firm declined to comment on how fresh confusion in Washington might impact its U.S. credit ratings, which in March were affirmed at AA+, with a stable outlook.<\/p>\n
Not all of the credit-rating firms, however, remained silent on the latest ruckus in Washington. \u201cGiven the fact that the House speaker was ousted after the [continuing resolution] was agreed, we expect that political brinkmanship around government-funding negotiations will remain tense and a shutdown later this year can\u2019t be ruled out,\u201d said Richard Francis, co-head of Americas sovereigns at Fitch Ratings, in an email to MarketWatch.<\/p>\n
Francis also pointed out that Congress thus far has failed to pass any of its 12 appropriations bills and that \u201cstark disagreements over appropriations\u201d have erupted both within the House of Representatives and between the House and the Senate.<\/p>\n
Read:<\/strong> Fed\u2019s inflation fight could be complicated by political chaos in Washington<\/p>\nHowever, Francis doesn\u2019t expect \u201cpolitical brinkmanship or even a government shutdown in the coming weeks\u201d to effect Fitch\u2019s AA+ ratings for the U.S. or its stable outlook.<\/p>\n
Walid Koudmani, chief market analyst at XTB, said the U.S. could still be \u201ca few steps away\u201d from another cut to its credit ratings, given the recent Fitch downgrade, but that it \u201calso seems events are leading in that direction.\u201d<\/p>\n
Even so, the outsize footprint of U.S. debt in the plumbing of global financial markets might matter more than its credit ratings, particularly with post-2008 reforms de-emphasizing the importance of credit ratings.<\/p>\n
\u201cIt\u2019s an ubiquitous instrument that is in every nook and cranny of our financial system,\u201d Hartford\u2019s Reganti said. He also thinks a third U.S. downgrade would \u201cmost likely be an unpleasant event, but the market memory of it would be pretty short.\u201d<\/p>\n
Moody\u2019s is often credited with creating the bond-rating business a century ago, but how long has it been rating the U.S. at AAA? That\u2019s a tougher question to answer precisely, Moody\u2019s said, because it would involve a walk through archives, factoring in changes to the U.S. economy over past decades, changing ratings methodologies, and the evolving regulatory landscape for credit-rating firms. However, Moody\u2019s affirmed the U.S. Aaa ratings about a year ago.<\/p>\n
Even before the latest political trouble in Congress, the 10-year Treasury yield
\n BX:TMUBMUSD10Y
\n had been sharply climbing, making it more expensive for the U.S. government to borrow. The latest repricing in the world\u2019s biggest bond market has been partly attributed to the Federal Reserve\u2019s actions in late September, when it signaled that interest rates could stay higher for longer than previously anticipated. <\/p>\n
But all eyes are now on the 5% level for the 10-year Treasury yield, even as it was easing back to 4.7% on Thursday, after touching an intraday high of 4.89% earlier this week, according to FactSet.<\/p>\n
\u2014-William Watts contributed reporting<\/em><\/p>\n<\/p><\/div>\nRead the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Wall Street is bracing for the potential demise of an old regime: The U.S. government\u2019s coveted AAA credit ratings. Earlier controversies on Capitol Hill over the U.S. debt limit prompted downgrades by S&P Global in 2011 and Fitch Ratings in August to AA+ from AAA, leaving Moody\u2019s Investors Service as the only major credit-rating firm […]<\/p>\n","protected":false},"author":1,"featured_media":69165,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-69164","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\n
Wall Street worries U.S. could lose last AAA rating as political chaos fuels government-shutdown fears | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Wall Street is bracing for the potential demise of an old regime: The U.S. government\u2019s coveted AAA credit ratings.Earlier controversies on Capitol Hill\" \/>\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=69164\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Wall Street worries U.S. could lose last AAA rating as political chaos fuels government-shutdown fears | iFintechWorld\" \/>\n<meta property=\"og:description\" content=\"Wall Street is bracing for the potential demise of an old regime: The U.S. government\u2019s coveted AAA credit ratings.Earlier controversies on Capitol Hill\" \/>\n<meta property=\"og:url\" content=\"https:\/\/ifintechworld.com\/?p=69164\" \/>\n<meta property=\"og:site_name\" content=\"iFintechWorld\" \/>\n<meta property=\"article:published_time\" content=\"2023-10-05T21:32:32+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-10-05T21:32:35+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/10\/1696541554_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=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/ifintechworld.com\/?p=69164#article\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=69164\"},\"author\":{\"name\":\"News Room\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\"},\"headline\":\"Wall Street worries U.S. could lose last AAA rating as political chaos fuels government-shutdown fears\",\"datePublished\":\"2023-10-05T21:32:32+00:00\",\"dateModified\":\"2023-10-05T21:32:35+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=69164\"},\"wordCount\":894,\"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=69164#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/ifintechworld.com\/?p=69164\",\"url\":\"https:\/\/ifintechworld.com\/?p=69164\",\"name\":\"Wall Street worries U.S. could lose last AAA rating as political chaos fuels government-shutdown fears | iFintechWorld\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/#website\"},\"datePublished\":\"2023-10-05T21:32:32+00:00\",\"dateModified\":\"2023-10-05T21:32:35+00:00\",\"description\":\"Wall Street is bracing for the potential demise of an old regime: The U.S. government\u2019s coveted AAA credit ratings.Earlier controversies on Capitol Hill\",\"breadcrumb\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=69164#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/ifintechworld.com\/?p=69164\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/ifintechworld.com\/?p=69164#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/ifintechworld.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Wall Street worries U.S. could lose last AAA rating as political chaos fuels government-shutdown fears\"}]},{\"@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":"Wall Street worries U.S. could lose last AAA rating as political chaos fuels government-shutdown fears | iFintechWorld","description":"Wall Street is bracing for the potential demise of an old regime: The U.S. government\u2019s coveted AAA credit ratings.Earlier controversies on Capitol Hill","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=69164","og_locale":"en_US","og_type":"article","og_title":"Wall Street worries U.S. could lose last AAA rating as political chaos fuels government-shutdown fears | iFintechWorld","og_description":"Wall Street is bracing for the potential demise of an old regime: The U.S. government\u2019s coveted AAA credit ratings.Earlier controversies on Capitol Hill","og_url":"https:\/\/ifintechworld.com\/?p=69164","og_site_name":"iFintechWorld","article_published_time":"2023-10-05T21:32:32+00:00","article_modified_time":"2023-10-05T21:32:35+00:00","og_image":[{"width":1280,"height":640,"url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/10\/1696541554_social.jpeg","type":"image\/jpeg"}],"author":"News Room","twitter_card":"summary_large_image","twitter_misc":{"Written by":"News Room","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/ifintechworld.com\/?p=69164#article","isPartOf":{"@id":"https:\/\/ifintechworld.com\/?p=69164"},"author":{"name":"News Room","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61"},"headline":"Wall Street worries U.S. could lose last AAA rating as political chaos fuels government-shutdown fears","datePublished":"2023-10-05T21:32:32+00:00","dateModified":"2023-10-05T21:32:35+00:00","mainEntityOfPage":{"@id":"https:\/\/ifintechworld.com\/?p=69164"},"wordCount":894,"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=69164#respond"]}]},{"@type":"WebPage","@id":"https:\/\/ifintechworld.com\/?p=69164","url":"https:\/\/ifintechworld.com\/?p=69164","name":"Wall Street worries U.S. could lose last AAA rating as political chaos fuels government-shutdown fears | iFintechWorld","isPartOf":{"@id":"https:\/\/ifintechworld.com\/#website"},"datePublished":"2023-10-05T21:32:32+00:00","dateModified":"2023-10-05T21:32:35+00:00","description":"Wall Street is bracing for the potential demise of an old regime: The U.S. government\u2019s coveted AAA credit ratings.Earlier controversies on Capitol Hill","breadcrumb":{"@id":"https:\/\/ifintechworld.com\/?p=69164#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/ifintechworld.com\/?p=69164"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/ifintechworld.com\/?p=69164#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/ifintechworld.com\/"},{"@type":"ListItem","position":2,"name":"Wall Street worries U.S. could lose last AAA rating as political chaos fuels government-shutdown fears"}]},{"@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\/69164","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=69164"}],"version-history":[{"count":1,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/69164\/revisions"}],"predecessor-version":[{"id":69166,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/69164\/revisions\/69166"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/media\/69165"}],"wp:attachment":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=69164"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=69164"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=69164"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}