S&P Cuts Outlook on Japan’s Debt to Negative

Standard and Poor’s ratings agency cut its outlook for Japanese government debt on Tuesday, citing reduced wiggle room on fiscal policy and voicing disappointment with the new government’s budget consolidation plans.

S&P cut its outlook on Japan’s long-term sovereign debt rating to negative from stable, while maintaining its AA long-term and A-1+ short-term local and foreign currency sovereign credit ratings.

“The outlook change reflects our view that the Japanese government’s diminishing economic policy flexibility may lead to a downgrade unless measures can be taken to stem fiscal and deflationary pressures,” the agency said in a statement. “Moreover, the policies of the new Democratic Party of Japan (DPJ) government point to a slower pace of fiscal consolidation than we had previously expected.”

source: CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza