American credit "perfect" no more! Moody's downgrades its long-term sovereign credit rating.

Moody's announced on Friday that it has downgraded the United States' long-term sovereign credit rating from the highest Aaa to one level below. This means that the United States' sovereign debt has been removed from the "top credit" category by all three major rating agencies. This downgrade is another significant move after Standard & Poor's first downgraded the US rating from AAA over a decade ago, and Fitch Ratings also downgraded the US credit rating from AAA to AA+ in 2023. Moody's action this time resulted in all three major rating agencies downgrading the credit rating of the United States. In its statement, Moody's pointed out that the rating downgrade "reflects the continued increase in the US government debt and interest payment ratio over the past decade, which is significantly higher than other sovereign countries of the same rating." The company emphasized that multiple US administrations and Congress have failed to take effective measures to control deficit and debt growth. Moody's stated: "We believe that the currently discussed fiscal plans are unlikely to lead to substantial mandatory spending cuts or long-term deficit reduction. With the rise in welfare spending such as social security and medicare over the next decade, and fiscal revenues remaining relatively stable, the US government will face increased budget deficit pressure." The agency predicts that sustained large fiscal deficits will further increase US debt and interest burden. Compared to past fiscal performance and other high-rated countries, the US fiscal situation may continue to deteriorate. However, Moody's also raised the outlook for the US credit rating from "negative" to "stable," citing strong economic growth potential in the US, the dollar remaining the dominant global reserve currency, and the US's system and governance capabilities, which may face tests but will not overall experience "substantial weakening." After the announcement of the rating downgrade, the market reacted quickly. The yield on 10-year US Treasury bonds rose rapidly from 4.44% to 4.48%, indicating that investors' concerns about US credit risk have intensified.