Stocks, Bonds And The Dollar Fall After Moody's Downgrades U.S. Credit Rating

U.S. stocks are drifting lower, while U.S. bonds and the value of the U.S. dollar are falling more sharply on Monday.

NEW YORK (AP) — U.S. stocks are drifting lower, while U.S. bonds and the value of the U.S. dollar are falling more sharply on Monday following the latest reminder that the U.S government seems to be hurtling toward an unsustainable mountain of debt.

The S&P 500 was 0.4% lower in morning trading after Moody’s Ratings became the last of the three major credit-rating agencies to say the U.S. federal government no longer deserves a top-tier “Aaa” rating. The Dow Jones Industrial Average was down 38 points, or 0.1%, as of 10:05 a.m. Eastern time, and the Nasdaq composite was 0.6% lower.

Moody’s pointed to how the U.S. government continues to borrow more and more money to pay for its expenses, with political bickering making it difficult to either rein in Washington’s spending or raise its revenue in order to get its ballooning debt under more control.

It’s a blow because the downgrade essentially means investors globally should not lend money to Washington at such low interest rates. The yield on the 10-year Treasury climbed to 4.52% from 4.43% late Friday. That number shows how much in interest investors are demanding of the U.S. government to lend it money for 10 years.

Perhaps even more joltingly, the yield on a 30-year Treasury leaped back above 5% before receding, up from less than 4% in September. Shorter-term Treasurys, which move more on expectations for what the Federal Reserve will do with overnight interest rates than on what investors are feeling about the U.S. government and economy, moved by much less.