Nov 13, 2023
Over the weekend credit rating agency Moody’s has cut the outlook on US government debt to negative. We know since the GFC that rating agencies tend to be behind the curve in their assessments. However they appear to wake up to the fact that that risks to fiscal strength of the US rise “with higher interest rates and without effective fiscal policy measures to reduce government spending or increase revenues, fiscal deficits will stay large, significantly weakening debt affordability”. With the Italian style political sabre rattling around a potential government shutdown currently going on in Washington, we also take note that the US now looks more like Italy than Switzerland in terms of government debt-to-GDP.