Futures on the S&P 500 are snapping a week‑long winning streak, falling nearly 1.2 % at the start of trading. Moody’s cut to the U.S. credit rating has revived a “sell‑America” mood — equities are sliding while rising Treasury yields spotlight the cost of servicing U.S. debt.
Since 22 April U.S. indices had been clawing back two months of losses triggered by fresh rounds of Donald Trump’s trade‑war tariffs. The US500 closed last week at the doorstep of the psychological 6 000 mark, brushing overbought territory (RSI > 70). Source: xStation5
For years debt was America’s chief export, and an enduring faith in U.S. exceptionalism and economic efficiency let the country summon record amounts of capital. That landscape may be shifting after Moody’s—the last of the three big agencies (alongside S&P and Fitch)—downgraded the United States. Moody’s reasoning echoes the themes Donald Trump campaigned on in 2024.
The focus is the relentlessly rising federal debt. From 2012 to 2024 the debt‑to‑GDP ratio climbed from 70 % to 98 %, and neither party has offered lasting measures to halt the debt spiral. Servicing costs are also swelling, as reflected in higher Treasury yields. Moody’s notes that interest on federal debt consumed 18 % of revenue in 2024, up from 9 % in 2021.
Although President Trump has called for debt reduction since the campaign, his administration’s actions—and Moody’s projections—do not point to quick progress. The 2025 budget shortfall is nearly $210 billion larger than in 2024, and the planned tax cuts may not be fully covered by tariffs given the drive to de‑escalate the trade war. Cuts to social programs pencilled in for 2026 would trim federal spending by only about 15 %, leaving the biggest outlays (e.g., Medicare and interest payments) largely intact. Despite Trump’s agenda, Moody’s forecasts U.S. debt will reach 134 % of GDP before 2035.
The United States has exited the club of top‑rated sovereign borrowers. Note, however, that most economies still rated AAA are themselves under review for possible status changes (“u” = under review). Source: Bloomberg Finance L.P.
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