Moody’s Says US Election Outcome Won’t Dent Credit Rating

While the presidential campaign has given new meaning to the concept of unpredictability and instability, one thing it won’t shake is the U.S. credit standing, according to one major ratings service.

In a report issued Monday, Moody’s Investors Service said the nation will maintain its pristine rating no matter who wins the hotly contested race.

“The election outcome will not affect the U.S.’s Aaa stable rating,” analyst Sarah Carlson and others wrote. “The U.S. possesses substantial credit strengths, including a very large, flexible economy, and the status of the dollar and Treasury bond as global reserve currency and bond market benchmark.”

The U.S. has found out the hard way how political instability can affect creditworthiness.

Back in August 2011, Moody’s rival Standard & Poor’s shocked financial markets when it cut the U.S. rating from triple-A to AA+ in the wake of a budget deal that the agency said came up short in addressing debt and deficit issues. The move briefly shook up markets, with the S&P 500 initially plunging more than 6 percent on the news.

Moody’s did not cut its rating at the time, but later switched its outlook for the U.S. to “negative.”

via 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 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