[HN Gopher] Moody's strips U.S. of triple-A credit rating
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Moody's strips U.S. of triple-A credit rating
Author : Anon84
Score : 96 points
Date : 2025-05-16 21:39 UTC (1 hours ago)
(HTM) web link (www.ft.com)
(TXT) w3m dump (www.ft.com)
| Anon84 wrote:
| https://archive.md/dnJ7Q
| riffraff wrote:
| I wonder if this will trigger a sell of in bonds, there's a
| common story that some investors are only allowed to invest in
| triple A bonds, and AFAIK this was the last of the big three
| still holding it for the US.
| JumpCrisscross wrote:
| > _some investors are only allowed to invest in triple A bonds_
|
| The usual language is two out of three. So any investor who had
| that language and hadn't gotten around to amending it to exempt
| Treasuries had already been forced to sell on the second
| downgrade.
| tedunangst wrote:
| Last time around this led to reduced borrowing costs, so good
| news, I guess.
| somanyphotons wrote:
| I would have expected that a worse credit rating would result
| in higher interests rates, what happened last time?
| JumpCrisscross wrote:
| > _Last time around this led to reduced borrowing costs_
|
| Last time Treasuries were unambiguously a haven asset. That
| correlation was broken on Trump's liberation day.
|
| Altogether, I'd be surprised if this downgrade has a material
| impact on financial markets. It's much more interesting for the
| House.
| actionfromafar wrote:
| This time it's about owning the libs and making some serious
| money on inside trading. Everything else is secondary. So it
| will play out differently.
| quickthrowman wrote:
| Incorrect.
|
| > Fitch Downgrade August 1 2023
|
| > SPY around 455 fell to 433 from August 1 to August 18
|
| > By October 27th SPY bottomed around 410 (-10%)
|
| > From August 1 to October 23, US 10y yield went from 3.9% to
| 5%
|
| Stocks went down and bond yields went up last time. The Federal
| Reserve raised the federal funds rate from 5-5.25% to
| 5.25-5.50% during the same time period.
| tedunangst wrote:
| Oh, I missed 2023. Was thinking of 2011 or whenever.
| tehjoker wrote:
| Didn't we lose this about a decade ago during the 2013 government
| shut down where the Republicans were threatening to miss payments
| and we got knocked down to AA-? I was wondering if we ever got it
| back to AAA.
| bobthepanda wrote:
| There are three ratings agencies and the other two downgraded
| but not Moody's (until now)
| fullstackchris wrote:
| Was gonna say, I thought this already happened last year...
| quadragenarian wrote:
| Not to be overly pedantic but there are more than 3. It's
| just 3 that are commonly used in asset management (S&P,
| Moody's, Fitch). Others include Morningstar DBRS (Dominion
| Bond Rating Services - rates primary Canadian debt issuers).
| Kroll is another one (used to be Duff & Phelps).
| A4ET8a8uTh0_v2 wrote:
| The reality is that the current trajectory is not exactly
| sustainable. So, for once, Moody seems to be doing its job. As to
| where they were for the past decade or so ( lets charitably say
| they were still trying to figure out where things land post 9/11
| ), when all those issues were allowed to fester, is not exactly a
| big secret.
|
| The simple reality is that US will need to go through a period of
| pain to correct some of those excesses. It will not be fun for
| anyone, which is why there is so much effort put forth to kick
| can down the road.
|
| And the part that really gets me is that congress is discussing
| cutting taxes, fed is being pressured to lower rates.. as if all
| those things were not at least a factor in the mess we are in
| now.
| toomuchtodo wrote:
| The reality is taxes must go up, and the bond market will force
| it to happen. You can't keep issuing debt forever to steal from
| the future for today when all of the evidence points to lower
| future growth.
|
| > Bond vigilantes, who can bring fiscally irresponsible
| politicians to heel by unloading a country's debt, may rear
| their head if Congress doesn't show any appetite to bring the
| federal deficit under control.
|
| https://finance.yahoo.com/news/bond-vigilantes-killed-trump-...
|
| https://ghpia.com/wp-content/uploads/2024/07/Investment-Insi...
| kevin_thibedeau wrote:
| Standard & Poor's and Fitch downgraded US credit years ago.
| Moody's is late to the party.
| actionfromafar wrote:
| The rating is also a reflection of what the rest of the world
| believes about the future of the US government. It's not solely
| about the numbers.
| pseudolus wrote:
| Moody's is in what is, currently, a hazardous line of business.
| Whatever their accuracy (their performance leading up to the
| financial crisis in 2008 didn't particularly lend them any
| credit) the reality is that they are certainly likely to be the
| target of informal (browbeaten in the media) and formal
| (investigations undertake by various agencies) actions in the
| short-term. They've unleashed a shit storm upon themselves the
| likes that they have probably never seen before. Some late night
| posts on Truth Social are likely to be imminent.
| actionfromafar wrote:
| ... and if they don't give their honest assessment, they are
| making themselves obsolete anyway.
| 9283409232 wrote:
| What does this mean for the laymen around here? I'm the laymen if
| I'm not being clear.
| awongh wrote:
| For Moody's or any other agency, do they have any real insight on
| credit worthiness?
|
| I would have just assumed that if you're another big financial
| institution you're doing your own research.
|
| Is it that orgs below a certain size need these people to help
| tell them what's going on?
|
| I would have also assumed anyone who holds an important amount of
| US treasuries does their own research and doesn't need to listen
| to any of these agencies?
|
| What actual value do they provide? (esp. in light of the housing
| crisis proving they weren't providing any value at all?)
| SOLAR_FIELDS wrote:
| Indeed, these were the same people that were reporting A+ on
| junk bonds back then, weren't they? Why are they even still
| around?
|
| https://www.theguardian.com/business/2017/jan/14/moodys-864m...
| buckle8017 wrote:
| They are indeed, Moody's ratings are Junk Ratings.
| animitronix wrote:
| Whatever
| mullingitover wrote:
| The US can issue currency to cover debt obligations. There should
| never be a situation where debts wouldn't be paid, the problem
| can just be printed away. The idea that the people who can print
| more money and pay the interest just _wouldn 't do it_, out of
| what, spite? Incompetence? Seems pretty bad.
|
| The fact that one party is always behind this financial
| profligacy, and the US keeps putting it in charge, probably means
| that the US' debt rating is _still_ much too high.
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