Fitch Ratings cut its top credit ratings for the U.S. to AA+ from AAA on Tuesday, pointing to 'erosion' of governance and the nation’s expected fiscal...
Fitch Ratings late Tuesday made good on recent concerns about the U.S. credit profile and downgraded its rating on the nation’s debt one notch to AA+ from AAA, saying that it reflects “expected fiscal deterioration,” a “high and growing” government debt burden, and an “erosion of governance” in face of repeated debt-limit standoffs and other ills.
The last 20 years have witnessed a “a steady deterioration in standards of governance” in the U.S., the debt-ceiling agreement notwithstanding, Fitch said Tuesday. Treasury Secretary Janet Yellen called the move by Fitch “arbitrary and based on outdated data,” in a statement Tuesday. She also said the decision “does not change what Americans, investors, and people all around the world already know: that Treasury securities remain the world’s preeminent safe and liquid asset, and that the American economy is fundamentally strong.”
Stock-market investors weren’t fazed by the warning back in June, but it remains to be seen how they will react when the market opens on Wednesday. The Dow Jones Industrial Average DJIA advanced 0.2% on Tuesday, while the S&P 500 index SPX lost 0.3%.
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