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Will the credit level in the USA decrease??
Summary:
Credit rating agency Fitch downgraded the highest rating of the U.S. government on Tuesday.This provoked anger from the White House and surprised investors, despite the resolution of the debt ceiling crisis two months ago.
Fitch downgraded the U.S. rating from AAA to AA+ citing the country's deteriorating fiscal situation over the next three years and doubts about the government's repayment capacity, resulting from repeated tense debt ceiling negotiations.
As a result of this downgrade, Fitch will become the second largest rating agency in the United States to have its AAA rating revoked following S&P.
Impact on the USA
1. The dollar declined against a wide range of currencies; 2. Single stock futures fell; 3. US bond futures rose
Comments from analysts
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 stated on Tuesday that he did not expect the market to react significantly to this news.
He said, "After the S&P downgrade, many of these contracts were restructured to be labeled as 'AAA' or 'government guaranteed.' Therefore, government guarantees are more important than Fitch's ratings."
Others agreed with this viewpoint.
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