Moody's tells us what we already know about US debt

S&P GLOBAL RATINGS stripped the US of its coveted AAA credit rating in 2011, and Fitch Ratings did the same in 2023. Given how the country's finances have only worsened since, it was only a matter of time before the third major ratings firm, Moody's Investors Service, fell in line and did the same.

- By Robert Burgess

That moment came late Friday afternoon after markets closed for the week, when Moody's, like S&P and Fitch, lowered the rating one level, to Aal.

The action "reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns," Moody's said in a statement. "Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs."

To be clear, there is next to zero chance the government won't be able to pay its creditors, and as was demonstrated after the actions by S&P and Fitch, the Treasury Department's access to funding is determined by forces beyond some letters in a ratings report. Indeed, foreign holders about doubled their holdings of Treasuries since 2011 to more than $9 trillion and have added about $1.5 trillion to their holdings since 2023, according to the Treasury Department. The dollar remains the world's primary reserve currency, with a 58% share, almost tripled that of the euro and its 20% share.