S&P affirms reduced US credit rating, outlook still negative
At the time, S&P said it lowered the credit rating in part because it had lost some confidence in the US political system. On Friday, it made clear that hasn’t changed.
“We believe that political polarization has increased in recent years,” the S&P said, citing the failure of last year’s deficit-reduction “supercommittee” to reach agreement.
Still, S&P says the United States has an “adaptable and resilient” economy, and many governments hold dollar reserves, a sign of confidence in the currency.
Last year’s rating cut contributed to a stock market plunge and caused a sharp fall in US consumer and business confidence.
Yet despite S&P’s concerns about US debt levels, investors seeking safety have been pouring money into Treasurys and driving down their interest rates. The yield on the 10-year Treasury note, at 1.64 per cent, is near a record low.
John Piecuch, a spokesman for S&P, said Friday that the agency revisits its credit ratings every year. Friday’s announcement came after “a routine review,” he said.
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