The decision to lower the United States credit profile would be expected, at the margin, to lift the yield that investors demand in order to buy U.S. Treasury debt to reflect more risk, and could dampen sentiment toward owning U.S. assets, including stocks. That said, all the major credit rating agencies continue to give the United States their second-highest available rating. The yield on the benchmark 10-year Treasury note climbed 3 basis points in after-hours trading, trading at 4.48%. The iShares 20+ Year Treasury Bond ETF — a proxy for longer term debt prices — fell about 1% in after hours trading, while the SPDR S&P 500 ETF Trust that tracks the benchmark index for U.S. stocks dropped 0.4%. Moody’s had been a holdout in keeping U.S. sovereign debt at the highest credit rating possible, and brings the 116-year-old agency into line with its rivals. Standard & Poor’s downgraded the U.S. to AA+ from AAA in August 2011, and Fitch Ratings also cut the U.S. rating to AA+ from AAA, in August 2023. “Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” Moody’s analysts said in a statement. “We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.”

Moody’s Ratings Service announced Friday that it was downgrading the United States' credit rating by one notch from Triple A to Aa1 based on an increase in the country's debt over the past decade. The service in 2023 downgraded its outlook for the U.S. to "negative" from "stable," but did not change the overall rating.

Moody’s on Friday cut the US credit rating by one notch, citing rising debt and interest payments that outpace those of similarly rated sovereigns, in a move that marks the end of an era as Moody’s was the last major agency to maintain a triple-A rating for US sovereign debt. The downgrade to “Aa1” from “Aaa” follows a change in the outlook on the sovereign in 2023 due to wider fiscal deficit and higher interest payments, and comes as Congress debates tax and spending plans that could deepen the US fiscal hole. “Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” Moody’s said Friday, as it changed its outlook on the US to “stable” from “negative.” Since his return to the White House on Jan. 20, President Trump has pledged to balance the US budget while his Treasury Secretary, Scott Bessent, has repeatedly said the current administration aims to lower government funding costs.