Moody’s Investors Service confirmed US top AAA rating for the second time in a week. It happened after another major rating agency, Standard & Poor’s, downgraded the world’s largest economy.
It’s necessary to note that Moody’s left the outlook for American debt ranking negative. The agency underlines that the greenback remains the main reserve currency and this fact allows the United States to have higher debt levels than other countries. In addition, Moody’s notes that US authorities have made much effort to fix the debt & deficit issue. The agency also pointed out that the nation has “unparalleled size and diversity” and enjoys “political and institutional stability”.
According to Moody’s, to keep the top rating the US has to hold its debt at “not far above” 75% of GDP by about 2015 – this ratio is forecasted for 2012, this year it’s expected to be 69.8%. The downgrade may happen before 2013 if US fiscal discipline or economic outlook deteriorates.
American stock markets fell by the most since December 2008. By the end of Monday’s US trading session Down Jones Index fell by 5.55%, S&P 500 contracted by 6.66%, while Nasdaq 100 lost 6.11%. At the same time, US dollar rose as even now it’s still perceived as a refuge. Yields on Treasury 2-year notes reached a record low.
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