Moody's downgraded US credit rating to Aa1, but immediate impact on Treasuries minimal.

From Investing.com: 2025-05-20 07:25:00

Moody’s downgraded the US credit rating to Aa1 (AA+), sparking concerns about the impact on US Treasuries. However, analysis suggests little immediate change due to their strong market presence and Basel risk weights. Commercial banks heavily rely on Treasuries for liquidity and collateral, with the Basel framework allowing 0% capital requirements for high-rated bonds. Despite the downgrade, banks’ risk-weight and Treasury market role remain intact for now. Yet, Moody’s warns of the need for a new bond market approach to address growing primary deficits and inflation concerns, raising questions about continued support for US deficits.



Read more at Investing.com: Moody’s Downgraded the US – Now What?