The US Is More AA+ Now

What do you do with this information?

One thing I suppose you could do is read Fitch’s note explaining the downgrade, say “huh, yeah, they make some good points,” and trim your allocation to US Treasuries. “The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to 'AA' and 'AAA' rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions,” says Fitch. It is a little weird that Fitch threatened to downgrade the US in May, putting it on a negative ratings watch because Congress had not yet worked out a debt-ceiling deal and was running out of time, and then actually downgraded the US in August after Congress did work out the deal and averted a near-term default, but I take their general point. “In Fitch's view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025,” fine.