Fitch places United States' 'AAA' on rating watch negative
- United States' 'AAA' rating watch negative reflects increased political partisanship that is hindering resolution to raise or suspend debt limit
- Still expect resolution to US debt limit before x-date; however, believe risks have risen debt limit will not be raised/suspended before x-date
- Would expect US country ceiling to remain at 'AAA' even in scenario of a debt default
- We believe failing to make full & timely payments on debt securities by the US Is less likely than reaching x-date & is a very low probability event
- Believe risks have risen that US debt limit will not be raised or suspended; consequently gov could begin to miss payments on some obligations
- Believe risks have risen that US debt limit will not be raised or suspended; gov could begin to miss payments on some obligations
- Believe failing to make full & timely payments on debt securities by the US Is less likely than reaching x-date & is a very low probability event
- Fitch now forecasts a general government deficit at 6.5% of GDP in 2023 and 6.9% of GDP in 2024 for the US
The longer the stand off carries on the more we'll get like this from rating agencies. Such developments are not supportive of risk trades.
