Wall Street Breakfast Moody's cuts U.S. debt rating
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May 18, 2025 The U.S. faces a credit rating downgrade as debt and interest payments soar. China's rare earth export restrictions disrupt supply chains globally. Home Depot's earnings report is shrouded in anticipation amid market volatility. The rapid housing slowdown, driven by the Federal Reserve, marks an unprecedented downturn. Combine this with declining new home sales and rising mortgage rates, and the housing market is feeling the strain. Amidst these challenges, investors are eyeing upcoming dividends for potential income.
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U.S. Credit Rating Downgrade
- Moody's downgraded the U.S. credit rating from AAA to AA1 due to rising debt and interest payments.
- They expect worsening fiscal deficits driven by entitlement spending and flat revenue over the decade.
U.S. Retains Credit Strengths
- Despite downgrade, the U.S. retains credit strengths like economy size and dollar reserve status.
- Moody's expects continued effective monetary policy by the Federal Reserve amid uncertainty.
China's Rare Earth Export Curbs
- China imposed rare earth export restrictions causing supply chain concerns, especially in Europe and U.S.
- Limited export licenses deepen fears of production disruptions for industries reliant on these materials.