Why the Moody’s downgrade of the US SHOULD BE a nothingburger —- In August 2011, S&P went first and downgraded the US from AAA to AA+. All hell broke loose. The reason hell broke loose was a lot of derivative contract, loan agreements, investment directives and the like prohibited the use of any non-AAA security. The fear was treasuries were not eligible collateral, and could put some people in violation of their directives or in technical default. In years after 2011 those contracts were rewritten to say government securities, excluding the qualification of the credit rating That’s why in August 2023, when Fitch downgraded to the US to AA+, the US became a split rated AA+ country. This downgrade had almost no effect on the bond market. The last of the rating agencies, Moodys, push the US down to AA+ today. So technically it didn’t even change the US’s overall credit rating because it was already split rated AA+, now it’s unanimous AA+. Bottom line is this won’t force anybody to do anything on Monday. Nothing changed.