Bescent says we will never default and raise the debt cap.
Treasury Secretary Scott Bescent said they are still unknown for the coming X days when the US violates its debt cap.
US stock futures refer to a lower open after Moody’s stripped the US from its top credit rating.
Moody’s on Friday reduced its credit rating from AA1 to AA1 as it is likely to violate the federal government’s fiscal deficit and existing U.S. debt.
At 6:10am ET, futures linked to the Blue Chip Dow slipped -0.84%, Broad S&P 500 futures fell -1.25%, and Tech-heavy Nasdaq futures fell -1.65%.
Moody’s is the last of three major rating agencies to downgrade the US Fitch rating, downgrading its US credit rating to AA+ in 2023. In 2011, Standard & Poor’s downgraded the country’s credit rating.
“We’re starting by stating that the US Treasury Department is undoubtedly the safest credit in the world,” said Mike O’Rourke, chief market strategist at Jonestrading. “Of course, I agree with most observers that the US fiscal state is on an unsustainable course. It should have to do with everyone that US federal debt is 125% of GDP, but we need to keep the situation in sight.
He noted that the Japanese government’s debt is now more than 200% of gross domestic product, with a 10-year yield far lower than the Ministry of Finance.
Trade worries remain
Continuing economic uncertainty is likely to maintain a driving market that is not very immediate term effects from Moody downgrades, O’Rourke said.
On Sunday, Treasury Secretary Scott Bescent said TARFF fees could return to the aggressive level announced on April 2 if the country does not negotiate in good faith with the United States.
“Some countries were 10%, some were significantly higher,” he met the press. “And here’s the leverage of the negotiations President Trump is talking about here: If you don’t want to negotiate, you’ll go back to the April 2nd level.”
Medora Lee is a money, market and personal finance reporter for USA Today. mjlee@usatoday.com and Subscribe to our free daily money newsletter Personal finance tips and business news every Monday to Friday.
