In This Article:
By Lewis Krauskopf
NEW YORK (Reuters) - TRADING DAY
Making sense of the forces driving global markets
By Lewis Krauskopf, Markets Correspondent
The Moody's downgrade of the U.S. credit rating rippled through markets on Monday and put fresh focus on the nation's fiscal outlook. Long-dated Treasury yields rose, the dollar fell, while stocks edged higher after rebounding from sharp declines early in the session.
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Today's Key Market Moves
* Long-dated U.S. Treasury yields climb, with the 30-yearyield hitting an 18-month high and breaking above 5% during theday, while benchmark 10-year yields also rise, at 4.46% late onMonday * U.S. stocks erase early-session losses, S&P 500 ends up0.1%, Dow gains 0.3% * Dollar weakens against key rival currencies * Oil prices settle modestly higher as signs of abreakdown in U.S. talks with Iran over its nuclear programoffset pressure from the Moody's downgrade of the U.S. creditrating * Gold prices firm, boosted by a softer dollar andsafe-haven demand
Today's Key Reads
1. Moody's downgrade intensifies investor worry about USfiscal path 2. The 'triple A' sovereign bond club has shrunk 3. Undimmed US 'exceptionalism' seems improbable 4. Republicans hope to nudge Trump tax cuts toward passagedespite divisions 5. How Trump’s crypto business partners left their oldclients in the lurch
Dealing with the US downgrade
The landmark downgrade of the U.S. sovereign credit rating dominated markets on Monday, the first full trading day since Moody's Investors Service cut the country's pristine rating late on Friday.
The move by Moody's to cut the "Aaa" rating for the U.S. rippled through Treasury markets, with the decision drawing attention to the country's deteriorating fiscal outlook. The ratings agency cited concerns about the nation's growing $36 trillion debt pile.
Longer-dated Treasury yields climbed. The 30-year yield initially broke above 5% and hit an 18-month high. The yield on the benchmark 10-year Treasury also rose, touching a one-month high of 4.56% before edging back below 4.5%.
The dollar weakened broadly on Monday, with the greenback hitting a more than one-week low against a basket of currencies.
While the timing of the downgrade caught some investors off guard, many nonetheless said the decision was not a shock. Moody's was the last of the three major credit agencies to downgrade the U.S. rating, with Standard & Poor's doing so after the 2011 debt ceiling crisis, and Fitch downgrading the U.S. in 2023.