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Moody’s warns US government shutdown would be credit negative

September 26, 2023| Forex Market

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A major credit agency, Moody’s said on Monday that the US government shutdown would harm the country’s credit. A severe warning comes only one month after Fitch downgraded the United States by one notch due to a debt ceiling crisis, per Reuters. 

Key quotes

“A shutdown would be credit negative for the US sovereign,” 

“In particular, it would demonstrate the significant constraints that intensifying political polarization put on fiscal policymaking at a time of declining fiscal strength, driven by widening fiscal deficits and deteriorating debt affordability.”

“The longer the shutdown lasts, the more negative it would be”

It’s worth noting that Fitch downgraded the US in August, citing the debt limit dispute as one of the reasons. Moody’s is the only major credit rating firm that has a top credit rating for the US.

 

Market reaction

These comments did not trigger a noticeable market reaction. As of writing, the US Dollar Index (DXY) was unchanged on the day at 105.95. 

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