Moody's Warning on US Debt Burden Proves Inconsequential
Moody's warning about the massive U.S. debt burden and its potential impact on government-issued fixed income has had little effect on the markets, with traders largely shrugging off the news. The high levels of government debt and deficits, along with political brinkmanship in Washington, are well-known issues that investors are already grappling with. While the warning echoes existing concerns, it is seen as a nonevent, as demand for U.S. Treasurys remains strong. However, some investors are starting to consider the long-term ability of the government to pay its bills, and there is skepticism about bonds if inflation remains elevated and the Federal Reserve maintains high interest rates.