Outlook Changes
S&P changed its outlook for the U.S. to “stable” in June from “negative,” citing “tentative improvements” in the debt burden. Moody’s did the same a month later, after having called in May for more deficit reduction measures.
“Though we had been waiting for perhaps more action on the fiscal front, even without that the debt trajectory was supportive of a Aaa rating,” which is the highest Moody’s grade, Steven Hess, the firm’s senior vice-president and lead sovereign analyst for the U.S., said in a July 19 telephone interview.
None of this matters to the bond market.
“The world really doesn’t care that the government isn’t rated AAA by all three raters,” James Sarni, senior managing partner in Los Angeles at Payden & Rygel, which oversees $84 billion, said in a July 31 telephone interview. “Our markets are more stable, they’re more liquid and they’re very large. While we may see somewhat slow growth in the U.S., on a relative basis the U.S. is going to be a pretty good place to be.”