AMSTERDAM, Nov 13 (Reuters) - U.S. Treasury yields edged higher on Monday, with investors largely shrugging off a decision by ratings agency Moody's to downgrade its outlook on the U.S. credit rating.
Moody's late on Friday lowered its outlook on the U.S. AAA credit rating to "negative" from "stable" citing large fiscal deficits and a decline in debt affordability.
The move follows a rating downgrade of the sovereign by another ratings agency, Fitch, over the summer, which came after months of political brinkmanship around the U.S. debt ceiling.
The Fitch downgrade meant that the United States no longer carries top-notch AAA ratings from two of the three main rating agencies, with Moody's negative outlook making it more likely the world's largest economy may lose its last AAA rating.
Treasury yields edged marginally higher on Monday in London, with analysts expecting little impact given prior downgrades of the U.S. rating.
The benchmark 10-year Treasury yield was up around a basis point at 4.64% by 0934 GMT.
Two-year yields were unchanged, while 30-year yields moved similarly higher.
"S&P and Fitch ratings are already a notch lower at AA+, so the Moody's move may be seen as a step towards catching up to the other rating agencies but if it did lose its last AAA rating that would be highly symbolic," said Jim Reid, strategist at Deutsche Bank.
Focus was on U.S. inflation data due on Tuesday.
A Reuters poll expects headline inflation rose 0.1% on a monthly basis in October, from 0.4% in September, while core inflation excluding volatile food and energy prices was unchanged at 0.3% on a monthly and 4.1% annually.
"The key data release this week will be tomorrow's U.S. CPI, which could disappoint expectations for an ongoing swift decline in inflation," said Rainer Guntermann, rates strategist at Commerzbank.
Market rate-cut expectations have eased with comments from Federal Reserve chair Jerome Powell, who said last week rates-setters "are not confident" that interest rates are yet high enough to finish the battle with inflation.
Traders now price the first Fed cut in June and expect three cuts by end-2024.
They had raised rate cut bets in recent weeks, pricing in a high probability of four, 25 basis-point Fed rate cuts next year, likely kicking off in May 2024. (Reporting by Yoruk Bahceli; editing by Dhara Ranasinghe)