Wall Street worries U.S. could lose last AAA rating as political chaos fuels government-shutdown fears

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Wall Street worries U.S. could lose last AAA rating as political chaos fuels government-shutdown fears
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A Moody’s U.S. downgrade would be an ‘unpleasant event, but the market memory of it would be pretty short,’ says Hartford Funds strategist

Wall Street is bracing for the potential demise of an old regime: The U.S. government’s coveted AAA credit ratings.

That casts doubt on the ability of the U.S. to retain its last batch of unblemished credit ratings, a go-to gauge of its trustworthiness on the global stage. It also could further rattle the roughly $25 trillion U.S. Treasury market, where yields recently surged to a 16-year high.Moody’s warned in late September that a government shutdown “would be a credit negative for the U.S. sovereign.

Fitch weighs in S&P Global in 2011 said policymaking had become “less stable, less effective and less predictable” than previously believed. Francis also pointed out that Congress thus far has failed to pass any of its 12 appropriations bills and that “stark disagreements over appropriations” have erupted both within the House of Representatives and between the House and the Senate.However, Francis doesn’t expect “political brinkmanship or even a government shutdown in the coming weeks” to effect Fitch’s AA+ ratings for the U.S. or its stable outlook.

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