'It's not going to have a material effect on the things that really matter' - analyst on Fitch

Record ID: 1736552

  • Title: 'It's not going to have a material effect on the things that really matter' - analyst on Fitch
  • Date: 2nd August 2023
  • Summary: WASHINGTON, D.C., UNITED STATES (AUGUST 2, 2023) (REUTERS) (SOUNDBITE) (English) SENIOR ECONOMIST AT MORNING CONSULT, KAYLA BRUUN, SAYING: "Investors tend to be a bit reactive by nature. So it's not surprising if there is a short-term reaction. Any time the foundation is shaken, which in a way, something we're very used to as having the top rating, seeing any disruption like that is going to cause a reaction. That being said, the real underlying drivers of what determines the valuation of company stocks and how they do over time are not so much related to the rating of the U.S. government. So what's really going to matter is business performance over time, economic growth over time, consumer spending over time, that, in the end, those fundamental drivers are really what's going to matter for stock valuations. So I would anticipate that after some short-term disruption to this, there shouldn't be too much prolonged reaction to just the changing of the rating." WASHINGTON, D.C., UNITED STATES (RECENT - JULY 27, 2023) (REUTERS) WHITE HOUSE PRESS SECRETARY KARINE JEAN-PIERRE WALKING TOWARDS LECTERN
  • Embargoed: 16th August 2023 19:54
  • Keywords: Biden Fitch Fitch Ratings White House Yellen credit rating debt ceiling downgrade
  • Location: VARIOUS
  • City: VARIOUS
  • Country: US
  • Topics: Economic Events,North America,Equities Markets
  • Reuters ID: LVA002181602082023RP1
  • Aspect Ratio: 16:9
  • Story Text:Fitch downgraded the U.S. credit rating due to fiscal concerns, a deterioration in U.S governance, as well as political polarization reflected partly by the Jan. 6 insurrection, Fitch Ratings said on Wednesday (August 2).
    In a move that took investors by surprise, Fitch downgraded the United States to AA+ from AAA on Tuesday (August 1), citing fiscal deterioration over the next three years and repeated down-to-the-wire debt ceiling negotiations that threaten the government’s ability to pay its bills.
    The agency based its decision in part on a perceived deterioration in U.S. governance, which it said gave less confidence in the government’s ability to address fiscal and debt issues.
    That deterioration, as well as increased polarization in the country’s political climate, was visible in the Jan. 6 insurrection, which the agency highlighted in meetings with the Treasury ahead of the downgrade.
    Fitch, which is owned by media group Hearst, is the second major rating agency to strip the United States of its triple-A rating, after Standard & Poor’s did so in 2011.
    S&P officials who made that seminal call more than a decade ago recently told Reuters they felt vindicated in their decision to cut the U.S. pristine rating, which they said at the time was due to heightened political polarization and insufficient steps to right the nation's fiscal outlook.
    (Production: Kyoko Gasha, Roselle Chen)
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