Debt and deficits, which were already rising before the pandemic, have started to erode the country’s traditional credit strengths, Fitch said in a report. ― Reuters pic
“Financing flexibility, assisted by Federal Reserve intervention to restore liquidity to financial markets, does not entirely dispel risks to medium-term debt sustainability, and there is a growing risk that US policymakers will not consolidate public finances sufficiently to stabilise public debt after the pandemic shock has passed,” Fitch said.
“It reduces confidence in US financial markets and it does prompt some entities to want to sell Treasuries, so you may see some back up in yields even though no one is really looking for US defaults,” he said.
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