19 Jul 2013
Flash: Moody’s decision fails to make waves – Deutsche Bank
FXstreet.com (New York) - On a more macro level Moody’s decision to change the outlook on the US Aaa sovereign rating to stable from negative came after the US markets had shut, but there was little market reaction to the announcement, notes Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank.
Growth progresses at faster rate
According to the Analysts, “The change in outlook comes almost exactly two years to the day that Moody’s first placed the rating on watch for possible downgrade” (later changed to negative outlook) – the rating agency said that the US budget deficit has been declining while growth is currently progressing at a faster rate compared with several Aaa peers and has demonstrated a degree of resilience to major reductions in the growth of government spending.
“It is a little ironic that the Moody’s announcement hit the newswires just five minutes after it was announced that Motor City would be filing for Chapter 9 bankruptcy protection. Detroit City’s filing has been described as the largest ever municipal bankruptcy in US history with debt estimated at around $18.5bn.”
Growth progresses at faster rate
According to the Analysts, “The change in outlook comes almost exactly two years to the day that Moody’s first placed the rating on watch for possible downgrade” (later changed to negative outlook) – the rating agency said that the US budget deficit has been declining while growth is currently progressing at a faster rate compared with several Aaa peers and has demonstrated a degree of resilience to major reductions in the growth of government spending.
“It is a little ironic that the Moody’s announcement hit the newswires just five minutes after it was announced that Motor City would be filing for Chapter 9 bankruptcy protection. Detroit City’s filing has been described as the largest ever municipal bankruptcy in US history with debt estimated at around $18.5bn.”