nickthomas2@benzinga.com
5 min read
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Financial markets were thrown into turmoil Friday after Moody’s—the last major ratings agency maintaining the U.S.' pristine credit status since 1917—shocked investors by downgrading the country's long-term credit rating. The stunning announcement triggered immediate selling across both traditional and cryptocurrency markets, leaving investors scrambling to reassess positions heading into an uncertain weekend.
In what many analysts are calling a watershed moment for global finance, Moody’s dropped its bombshell announcement 11 minutes before futures trading closed on Friday—leaving traders with no immediate way to respond. The ratings agency downgraded US debt from AAA to Aa1, joining Fitch, which downgraded the U.S. in 2023, and the 2011 cut by S&P.
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Moody’s cited “the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.” The agency further warned it “expects borrowing needs to continue to grow and for it to weigh on the US economy as a whole”—a sobering assessment that could push up interest rates and create additional financial burdens for Americans already struggling with tariffs and inflation.
The Nasdaq futures contract (NQ1!) immediately cracked below its yearly opening level—a technically devastating break that signals potential further carnage when markets reopen next week.
The White House response added another layer of controversy to the market upheaval. In a statement on X, White House Communications Director Steven Cheung suggested Moody’s analysis might be politically motivated, writing: “Mark Zandi, the economist for Moody’s, is an Obama advisor and Clinton donor who has been a Never Trumper since 2016. Nobody takes his ‘analysis’ seriously. He has been proven wrong time and time again.”
This political dimension adds further uncertainty for markets already processing the first time in over a century that the U.S. has lost all of its perfect credit ratings.
