On May 16, 2025, Moody's Investors Service downgraded the United States' sovereign credit rating from its highest level, Aaa, to Aa1. This decision was driven by concerns over the nation's escalating debt, which has reached $36.2 trillion—approximately 124% of the U.S. GDP—and the lack of a clear strategy to address persistent fiscal deficits.
The immediate market response included a brief spike in Treasury yields, with the 30-year yield surpassing 5% for the first time since 2023 . However, major stock indices remained relatively stable, as investors had anticipated the downgrade and adjusted their positions accordingly.
Financial institutions were also affected; Moody's downgraded the long-term deposit ratings of prominent banks such as JPMorgan Chase, Bank of America, and Wells Fargo to Aa2 from Aa1, citing reduced government support capacity.
For consumers, the downgrade could lead to higher interest rates on mortgages, auto loans, and credit cards, as increased government borrowing costs may trickle down to individual borrowers.
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