The U.S. was stripped of its top-tier sovereign credit rating by Fitch Ratings, echoing a move made more than a decade ago by S&P.
The credit assessor downgraded the US from AAA, a ranking the nation has held at Fitch since at least 1994, according to data compiled by Bloomberg. The move comes in the wake of major political battles over the nation’s borrowing and repeated standoffs over raising the debt limit. While the most recent legislative impasse was resolved, it remains a potential issue of concern going forward.
“The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to ‘AA’ and ‘AAA’ rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions,” Fitch said in a statement.
Fitch had warned May 24 that there was a risk of a downgrade. The US is now rated AA+ by Fitch, one step below AAA, and the assessor has a stable outlook on the country.
Moody’s Investors Service currently rates the US sovereign Aaa, its top rating. S&P Global Ratings has it at a score of AA+, one notch below the top tier, having removed its top score back in 2011 on the heels of an earlier debt-ceiling crisis.
Treasury Secretary Janet Yellen responded to the downgrade, calling it “arbitrary” and “outdated.”
Treasury markets were closed at the time of the announcement.
“I suspect the market will be in two minds about it — at face value, it’s a black mark against the U.S.’s reputation and standing, but equally, if it fuels market nervousness and a risk-off move, it could easily see safe-haven buying of U.S. Treasuries and the dollar,” said David Croy, strategist at Australia & New Zealand Banking Group in Wellington. “It’s finely balanced.”
In an era of AI euphoria and market FOMO, getting back to basics with fixed income may be the most contrarian and most important move advisors can make.
Voya Financial adds private equity, credit and real estate options to its AMA program, building on support for looser federal investment rules in retirement accounts.
Shannon Reid, president of Osaic and the network’s number two executive, has plenty of challenges, industry executives said.
Auditors flagged the commingling. The COO allegedly knew. Investors kept getting the pitch
The advisors on the move include two brothers leading a family practice in Connecticut, and a husband-and-wife tandem working with business owners in the West Coast.
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
