{"id":15464,"date":"2025-05-21T07:30:08","date_gmt":"2025-05-21T07:30:08","guid":{"rendered":"https:\/\/finderica.com\/?p=15464"},"modified":"2025-05-21T07:30:08","modified_gmt":"2025-05-21T07:30:08","slug":"what-moodys-u-s-credit-rating-downgrade-means-for-treasurys","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=15464","title":{"rendered":"What Moody\u2019s U.S. Credit Rating Downgrade Means for Treasurys"},"content":{"rendered":"
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The investing information provided on this page is for educational purposes only. SS, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.<\/span><\/span><\/span><\/p>\n<\/div>\n<\/div>\n

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Moody’s Ratings has downgraded the credit rating of the United States. But what exactly does that mean? And how might it affect Treasury investments?<\/span><\/p>\n<\/div>\n

Why did Moody\u2019s downgrade the credit rating?<\/span><\/h2>\n
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Moody\u2019s Ratings downgraded the U.S. credit rating on May 16 from Aaa, the highest rating, to Aa1. This moves the rating down one notch on the agency\u2019s 21-notch scale. <\/span><\/p>\n<\/div>\n

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Moody\u2019s decision reflects concerns about how the nation has managed its finances over the past decade and its expectation that government debt and interest rates will continue to grow.<\/span><\/p>\n<\/div>\n

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\u201cThe U.S. government has been spending more while bringing in fewer tax revenues, and the situation has reached a tipping point where Moody’s believes U.S. economic strengths no longer outweigh these weaknesses,\u201d says Elizabeth Renter, SS\u2019s senior economist. <\/span><\/p>\n<\/div>\n

What does a credit rating downgrade mean?<\/span><\/h2>\n
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A credit rating downgrade essentially means that government debt, including bonds and securities, is viewed as becoming riskier. But that doesn\u2019t mean there\u2019s cause for panic. <\/span><\/p>\n<\/div>\n

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\u201cThe downgrade is really the smallest downgrade possible, though, in part because of our strong economy overall,\u201d Renter says. <\/span><\/p>\n<\/div>\n

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Rating changes are nothing new, adds Daniel Masuda Lehrman, a certified financial planner and founder of Masuda Lehrman Wealth in Honolulu, Hawaii. <\/span><\/p>\n<\/div>\n

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\u201cMoody\u2019s is actually the last major credit rating agency to downgrade the U.S, after S&P did so in 2011 and Fitch in 2023,\u201d Lehrman said in an email interview. <\/span><\/p>\n<\/div>\n

What\u2019s happening now?<\/span><\/h2>\n
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Following Moody\u2019s rating change, Treasury security yields, or interest rates, have risen and prices have gone down. Treasury prices and yields typically move in opposite directions \u2014 when interest rates go up, investors often chase that higher yield, which makes previously issued bonds with lower fixed yields less valuable. <\/span><\/p>\n<\/div>\n

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\u201cThe market has seen a mild sell-off of Treasurys, which has increased yields, particularly for longer-term Treasurys,\u201d Lehrman said. <\/span><\/p>\n<\/div>\n

What does this mean for Treasury investments?<\/span><\/h2>\n
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Moody\u2019s credit rating hasn\u2019t fallen far, and Treasury securities are still liquid, meaning they\u2019re generally easy to convert to cash. <\/span><\/p>\n<\/div>\n

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Lehrman said that investors can make sure they aren’t overexposed to Treasurys with long maturity dates, as these tend to be more volatile. <\/span><\/p>\n<\/div>\n

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Shorter term investments, like T-bills, may not see much impact. <\/span><\/p>\n<\/div>\n

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\u201cNew investors might benefit from higher yields going forward,\u201d Lehrman added. \u201cDespite the downgrade, the overall consensus is that Treasurys are safe thanks to their liquidity and the dollar’s status.\u201d<\/span><\/p>\n<\/div>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The investing information provided on this page is for educational purposes only. SS, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments. Moody’s Ratings has downgraded the credit rating of the United States. But what exactly does that mean?<\/p>\n","protected":false},"author":1,"featured_media":15465,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[195],"tags":[238,2263,435,5250,4475,2846,272],"class_list":{"0":"post-15464","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-credit","9":"tag-downgrade","10":"tag-means","11":"tag-moodys","12":"tag-rating","13":"tag-treasurys","14":"tag-u-s"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/15464","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15464"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/15464\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/15465"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15464"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15464"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15464"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}