US Credit Rating Cut by Fitch Possible Even With a Debt Deal, TD Says
- Political brinksmanship, unsustainable debt path are factors
- A downgrade could boost Treasuries as traders seek safety
The US Capitol in Washington, DC.
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A downgrade of a key US credit rating by Fitch Ratings is on the table regardless of the outcome of debt-ceiling discussions — and the move could drag down Treasury yields amid a broader flight to quality, say TD Securities strategists.
“Even if the US is able to avoid the worst case scenario of payment delays and a default, we believe that Fitch still may still downgrade the US rating to AA+, citing political brinksmanship and an unsustainable debt path,” strategists Gennadiy Goldberg and Molly McGown said in a note Friday.