Congress has been given ample time to increase the government?s debt limit, but a lethargic response has forced Moody?s Investors Service to consider downgrading the government?s credit rating, putting pressure on U.S. Treasuries and dollar related exchange traded funds (ETFs).
The Moody?s ratings firm is cogitating on lowering the government?s credit rating from Aaa if no changes on the debt limit or no ?credible agreement? on deficit cuts are met, report Michael P. Regan and Elizabeth Stanton for Bloomberg. On May 31, a bill that would raise the debt limit by $2.4 trillion failed to achieve the necessary votes. The S&P has already warned the government that it may lose its AAA credit rating if an agreement on reducing budget deficits and national debt is not passed.
?The worst case could still be bad,? commented Brett Rose, interest-rate strategist at Citigroup Global Markets. ?You could still see a 50 basis
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