Moody's Controversial Decision: US Credit Rating Outlook Turns Negative

Moody's has downgraded its outlook on the US credit rating to "negative" from "stable" due to large fiscal deficits and a decline in debt affordability, following a similar move by Fitch earlier this year. The rating agency cited continued political polarization in Congress as a risk to reaching a consensus on a fiscal plan. The Biden administration criticized the change, emphasizing the strength of the American economy and Treasury securities. While a Moody's downgrade may not have a significant impact on the US bond market, it increases pressure on congressional Republicans to advance funding legislation and avert a partial government shutdown.