On August 1, credit rating agency Fitch downgraded the United States from its highest triple AAA rating to AA+. Two of the three leading ratings agencies now rate the US at their second highest tier – Standard and Poor’s previously downgraded the US to AA+ in 2011, leaving only Moody’s with the US at the highest rating.However, the market impact has been minimal. There was no significant movement in the price and yield of US Treasuries, the benchmark borrowing mechanism, nor in the value of the US dollar against other currencies – even after the US Treasury announced the following day that it would increase borrowing by $7bn in the next quarter and add another $6bn in its debt auctions in the coming month.The reality is that there is ample demand for US debt, which plays a vital role not only in the US financial system but across the globe.
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