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a black eye for the US: Fitch downgrades US debt rating from the highest AAA rating to AA+
on debt ceiling drama and governance worries
https://www.cnn.com/2023/08/01/business/fitch-downgrade-us-debt/index.html

US debt has long been considered the safest of safe havens, but Tuesday’s rating cut suggests it has lost some of its luster. The downgrade has potential reverberations on everything from the mortgage rates Americans pay on their homes to contracts carried out all across the world.

The move could cause investors to sell US Treasuries, leading to a spike in yields that serve as references for interest rates on a variety of loans.

Fitch said the decision wasn’t just prompted by the latest debt ceiling standoff but rather “a steady deterioration in standards of governance over the last 20 years” regarding “fiscal and debt matters.”

S&P has maintained its AA+ rating on the US after the 2011 downgrade while Moody’s has kept its AAA rating.

In fiscal year 2022, the US paid $475 billion in interest — or 1.9% of gross domestic product. That amount will nearly triple to $1.4 trillion by 2033, or well over 3% of GDP, according to the CRFB’s analysis of the Congressional Budget Office forecast.