S&P sounds alarm on US debt

Published: April 18 2011 15:19

Standard & Poor’s issued a stark warning to Washington on Monday, cutting its outlook on US sovereign debt for the first time and throwing more fuel on the raging debate over America’s swollen deficits.

The agency kept America’s credit rating at triple A but for the first time since it started rating US debt 70 years ago, cut its outlook from “stable” to “negative”. A negative outlook means there is a one-third chance of a downgrade in the next two years.

Doubts about US creditworthiness could threaten the dollar’s use as a global reserve currency amid the rise of rivals such as China that have better growth prospects and fewer fiscal challenges.

“This, at its core, is questioning what was an unquestionable tenet of the financial markets,” said Guy LeBas, chief fixed-income strategist at New York broker-dealer Janney Montgomery Scott. He said the chance of a downgrade represents “a higher risk level for the Treasury market than at any point in the memorable past”

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Posted by gadsden on Apr 19 2011. Filed under Breaking News, Finance, Headlines. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry