MOODY’S PLACES U.S. BOND RATING ON REVIEW – Citing the “rising
possibility” that political leaders in the U.S. won’t come to an
agreement on raising the debt limit, Moody’s Investors Service has placed the AAA bond rating currently held by the U.S. on review for a possible downgrade. At the same time, discussions between GOP leaders and President Obama on raising the debt limit continued to go nowhere today,
with Republicans still refusing to consider any anything related to
revenue increases and Democrats withholding any further cuts in spending
in response. Some investors and analysts
are worrying that certain members of Congress might prefer to let a
U.S. debt default take place rather than face the heat from angry
constituents.
In an appearance before Congress today, Federal Reserve Chairman Ben Bernanke indicated
that additional monetary easing may be on the horizon, saying that a
new stimulus program with additional asset purchases is already being
planned. In prepared remarks, the Chairman stated that the growth of
the economy is slower than expected, and that if that slow growth
continues, “…the Federal Reserve remains prepared to respond should
economic developments indicate that an adjustment in the stance of
monetary policy would be appropriate." Reacting to the news, the price
of gold rose climbed to a record high of $1,584.39 per ounce before
ending the day at $1,584.00 per ounce, with both stocks and Treasury
yields increasing too.
The federal budget deficit for June came in at $43.1 billion, with the year-to-date budget deficit at $970.5 billion. Experts predict that deficit is set to exceed the $1 trillion mark for the third year in the row. Meanwhile, a recent poll by Reuters
shows that 63% of Americans feel the country is headed in the wrong
direction, with concern centered on unemployment and the government’s
efforts to raise the U.S. debt limit.
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