Will America's credit level drop??
summary:
The rating agency Fitch lowered the US government's highest rating on Tuesday. This surprised investors by inviting an angry reaction from the White House despite the resolution of the debt ceiling crisis two months ago.
Fitch lowered the US rating from AAA to AA+ on the grounds of financial deterioration over the next three years and repeated tight debt ceiling negotiations, doubting the government's ability to pay.
Due to this downgrade, Fitch is the second major rating company after S&P to strip the US of its triple A rating.
Implications for the United States
1. The dollar fell in a wide range of currencies; 2. Stock futures fell; 3. US bond futures rose
Analysts' comments
Analysts pointed out the risk that further downgrades by major rating agencies could affect investment portfolios holding the highest rated securities.
However, Raymond James analyst Ed Mills said Tuesday that he doesn't expect the market to respond significantly to the news.
He said, “I understand that after S&P was downgraded, many of these contracts were remade to describe them as 'triple A' or 'government assurance'. Therefore, government guarantees are more important than Fitch's ratings,” he said.
Others agreed with that opinion.
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