Moody's cuts US rating: "Public debt and deficit increase, budget law does not cut them"

NEW YORK – Historic failure for the United States. The rating agency Moody's removes the maximum rating, “AAA”, from the public debt of the stars and stripes. The level of the credit rating is now “Aa1” heralding a storm on all the markets , already started by the race of the yields of government bonds that yesterday, before the announcement arrived after the stock markets closed, already guaranteed a high yield: 4.49% for a bond with a ten-year maturity. But all debt securities in dollars could be downgraded in cascade.

It's a blow for Donald Trump, who was preparing to return home after a star-studded trip to the Middle East in which he extolled America's golden age and announced deals with sheiks worth hundreds of billions of dollars .

Credit ratings watchdogs think differently, citing rising debt (to $37 trillion, or 124% of GDP) and interest rates that are "significantly higher than those of other similarly rated sovereigns ."

The no of 5 republicans

Just hours earlier, five Republicans had blocked Trump's tax bill in the House Budget Committee, arguing that it would lead to an "unsustainable" increase in the deficit of $3.3 trillion over ten years .

The annual deficit is expected to close at $2 trillion, or 6% of GDP , according to estimates for 2025.

"The US administrations and Congress - explains the rating agency - have failed to find an agreement on measures capable of reversing the trend of large annual fiscal deficits and rising interest costs ".

Added to the difficulties in domestic fiscal management are doubts about the effectiveness of the tariff policy and finally the tensions between the White House and the central bank, the Fed, even though Moody's says it is certain that the dollar "will continue to be managed independently ".

Like Fitch

The status of the world's most creditworthy sovereign debtor is now in doubt. Moody's joins Fitch (which removed the maximum rating in 2023) and S&P (in 2011) in placing the world's largest economy below the maximum triple-A rating.

The one-level downgrade comes more than a year after Moody's changed its outlook on the country's rating from stable to negative. Now the agency has brought the outlook back to stable, but it's not enough to bring back the smile on the president's face .

The judgment is harsh and opens up worrying scenarios: «While recognizing the notable economic and financial strengths of the United States - adds the agency - we believe that these are no longer sufficient to counterbalance the deterioration of fiscal indicators».

Tax benefits

"We do not believe," he stressed, " that the current fiscal proposals under discussion will result in substantial and lasting reductions in mandatory spending or deficits. We expect larger deficits over the next ten years."

And again: "Persistent and large fiscal deficits will push debt and interest burdens ever higher. Fiscal performance will likely deteriorate ."