Moody’s, the lone major rating agency to maintain a AAA rating for the U.S. government, changed its outlook Friday for Treasury debt to “negative” from “stable.”1 The outlook change comes at a challenging time with a ballooning U.S. budget deficit, Treasury debt interest costs surging and a possible government shutdown this week. Another disappointing Treasury long bond auction last week is a troubling sign, with Treasury debt issuance set to surge next year. Moody’s action is certain to widen the political divide in Washington, D.C., as both parties blame the other for the shift in outlook.
This week’s economic calendar will provide Federal Reserve policymakers with more important data points on inflation, with the consumer price index (CPI) out Tuesday and the producer price index (PPI) on Wednesday.2 Both numbers are expected to come in at 0.1% — benefiting from the recent decline in energy prices. The October retail sales report released Wednesday will give another read on the so-far resilient U.S. consumer as we enter the holiday shopping season.
1Reuters – Moody's turns negative on US credit rating, draws Washington ire; 11/10/23
2MarketWatch – U.S. Economic Calendar; as of 11/13/23
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