The ratings agency downgraded the full faith and credit of the USA to Aa1 from Aaa. That means that all three ratings agencies have now removed the US top rating.
The drop comes a year after Moody's lowered its outlook on the US. That was a sign this could be coming but the usual 18-24 month guideline was spend up so that it would be lobbed at a high stakes time. Moody's says the new rating is stable but also highlights the obvious problem.
"Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs," Moody's said.
“While we recognize the US’ significant economic and financial strengths, we believe these no longer fully counterbalance the decline in fiscal metrics,” Moody’s wrote.
There was some very late moves in the market on this and I'd expect it's negative for the dollar on Monday and positive for gold.
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