Wall Street Today | US Risks Its Top Credit Rating With Shutdown, Moody's Warns

Moody’s Investors Service, the only remaining major credit grader to assign the US a top rating, has signaled that its confidence is wavering ahead of a potential government shutdown.

While “debt service payments would not be impacted and a short-lived shutdown would be unlikely to disrupt the economy, it would underscore the weakness of US institutional and governance strength relative to other Aaa-rated sovereigns,” analysts led by William Foster wrote in a report Monday. Thus far, Congress has shown no sign of being able to avoid a shutdown coming on Oct. 1.

As the cross-asset selloff engulfed Wall Street last week, hedge funds ramped up their bets against stocks while one measure of their market positioning plunged the most since the March 2020 crash.

From retail investors to rules-based systematic traders, appetite for equities is subsiding after a 20% rally this year that’s fueled by euphoria over artificial intelligence.

Oil has added about 25% since June and is heading for the biggest quarterly gain since March 2022 on supply curbs by OPEC+ leaders Saudi Arabia and Russia. The rally led hedge funds to boost their bullish bets on WTI to the highest since February 2022 and has rekindled talk of the $100-a-barrel crude.