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Moody’s ranking has reduced the United States credit rating. But what does it mean? And how can this affect the investment of the treasury?
Why did Moody reduce the credit rating?
Moody’s ranking down the US credit rating from AAA on May 16 in AA1. This reduces a mark on the agency’s 21 touch scale.
Moody’s decision reflects on how the nation has arranged its financial support over the past decade and expects government debt and interest rates to increase.
“The US government is spending more on taxing tax revenue, and the situation has reached a crucial place where Moody believes that US economic powers are nothing more than these weaknesses,” says Elizabeth, a senior economist at Nairrd Walt.
What does a credit rating down grade mean?
The main meaning of a reduction in credit rating is that government loans, including bonds and securities, are seen as a threat. But that does not mean that panic is the cause.
The tenant says, “Down grade is really the smallest downside grade, though a part of it is overall because of our strong economy.”
Daniel drafting Laureman, the founder of a certified financial planner and drafting in Hawaii, said that changes in the ranking are nothing new.
“Moody is actually the last major credit rating agency to download the United States, followed by S&P in 2011 and in 2023,” said Lehmani in an email interview.
What’s going on now?
After a change in the moody rating, the production of treasury security, or interest rate has increased and prices have dropped. Treasury prices and output are usually transmitted to opposing directions – when interest rates increase, investors often pursue more production, which makes the previously released bonds less valuable with less fixed output.
“The market has a slight sale of treasury in the market, which has increased production, especially for long -term treasures,” said Laiman.
What does this mean for Treasury Investment?
Moody’s credit rating is not far away, and treasury securities are still liquid, which means they are usually easy to convert to cash.
Investors can make sure they are not too much for the treasury with long maturity dates, as they are more volatile.
Small -term investment, such as T -Blas, cannot see much effect.
“The new investors can benefit from the high production,” said Laiman.
