Fitch Reaffirms US 'AA+' Credit Rating, Warns Of Growing Debt Burden: 'Tax Cuts Will Be Extended Under Either Trump Or Harris'
Portfolio Pulse from Piero Cingari
Fitch Ratings reaffirmed the U.S. credit rating at 'AA+' with a stable outlook, highlighting strengths like high per capita income and the U.S. dollar's financial flexibility. However, concerns over escalating debt and political polarization were noted. The U.S. economic growth is projected to decelerate, with a slight narrowing of the deficit expected in 2024. Treasury yields and the U.S. dollar remained broadly unchanged following the report, while Treasury-linked ETFs fell.
August 29, 2024 | 8:23 pm
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NEGATIVE IMPACT
The iShares 20+ Year Treasury Bond ETF (TLT) fell 0.9% as Treasury yields rose slightly following the Fitch report. The increase in yields reflects concerns over rising debt levels.
The rise in Treasury yields, driven by concerns over debt levels, negatively impacted the TLT ETF, causing a decline in its price.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 70
NEGATIVE IMPACT
The US 10 Year Treasury Note ETF (UTEN) eased 0.5% as Treasury yields increased slightly. This reflects market reactions to Fitch's concerns over U.S. debt levels.
The slight increase in Treasury yields, due to Fitch's concerns about U.S. debt, led to a decrease in the UTEN ETF's price.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
The Invesco QQQ Trust, Series 1 (QQQ) was up just 0.1% after surging earlier in the day. The tech-heavy ETF's performance reflects broader market caution following Fitch's report.
The initial surge in QQQ was tempered by market caution following Fitch's report, resulting in a minimal net gain.
CONFIDENCE 80
IMPORTANCE 50
RELEVANCE 60
NEUTRAL IMPACT
The SPDR S&P 500 ETF Trust (SPY) edged up 0.2% as stocks pared gains during afternoon trading. The market remains cautious amid Fitch's credit rating reaffirmation.
Despite the reaffirmation of the U.S. credit rating, the market's cautious stance led to only a slight increase in the SPY ETF.
CONFIDENCE 80
IMPORTANCE 50
RELEVANCE 60
POSITIVE IMPACT
The U.S. Dollar Index, tracked by the Invesco DB USD Index Bullish Fund ETF (UUP), rose 0.3% following Fitch's reaffirmation of the U.S. credit rating. The stability of the U.S. dollar is supported by its role in global reserves and trade.
The reaffirmation of the U.S. credit rating and the stability of the U.S. dollar in global reserves positively impacted the U.S. Dollar Index, leading to a slight increase.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80