The ‘Sell America’ Trade Is Back After Moody’s US Downgrade

After Moody’s Ratings stripped the US government of its top credit rating late Friday, markets started the new week off by sending the 30-year Treasury yield above 5% — a signal investors are worried about the country’s debt and the trade war. In echoes of the “Sell America” fervor that swept global markets last month, futures for the S&P 500 and Nasdaq 100 fell, the dollar weakened and gold strengthened.

Moody’s move was expected by many — the federal budget deficit is running near $2 trillion a year, or more than 6% of GDP. The ratings firm blamed successive presidents and congressional lawmakers for a ballooning budget deficit it said showed little sign of narrowing. But the downgrade risks reinforcing Wall Street’s growing worries over the US sovereign bond market as President Donald Trump renegotiates trade deals and upends established partnerships. On Sunday night, a key House committee advanced Trump’s giant tax and spending package after Republican hardliners won agreement from party leaders to speed up cuts to Medicaid health coverage, with deficit worries boosting the drive to slash government spending.