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Moody's downgraded the USA's AAA rating, but this time it is very different from 2011.
Wall Street veteran Jim Bianco believes that the actual impact of this rating downgrade on the US bond market may be "negligible." The panic in the market in 2011 was due to the possibility that US Treasury bonds would no longer meet the criteria for qualified collateral, leading many institutions to be forced to sell their US bonds. However, the system has now been fully adjusted, and changes in ratings will no longer trigger mandatory actions or selling behaviors.
Concerns about the government deficit have led Moody's to downgrade the USA's credit rating to Aa1.
① Due to the increase in the ratio of the USA government's debt and interest payments, Moody's has decided to downgrade the USA's sovereign credit rating from Aaa to Aa1; ② The USA's fiscal deficit approaches 2 trillion dollars each year, accounting for over 6% of GDP, and high interest rates have increased debt servicing costs, with the scale of debt exceeding the total economy.
The king of the "Vulture Fund" sounds the alarm: Trump's policies could trigger capital outflow from the USA.
The Republican super donor and Wall Street mogul, Elliott, candidly expressed pessimism about Trump's tariff policy: "It may be harsher than the tariffs that exacerbated the Great Depression in the 1930s."
U.S. Treasury Yields Fall, Extend Thursday's Moves -- Market Talk
Schroders: In Q1, the resilience of High Yield Bonds in the USA is highlighted, but tariffs and stagflation risks are intensifying market divergence.
The performance of USA Treasury bonds in the first quarter of 2025 still reflects the increasing worries of investors about the deteriorating economic growth outlook and their growing interest in safe-haven assets.
Dollar Tracks Treasury Yields Lower on Benign US Data