Global Shock: U.S. Treasury Yields Surge Following Moody’s Credit Downgrade

Washington D.C., May 20, 2025 –

Global financial markets were rattled on Monday as Moody’s delivered a powerful blow to the United States’ fiscal credibility: the country has officially lost its coveted top-tier credit rating. In immediate response, U.S. Treasury yields soared after Moody’s downgraded the nation’s credit rating from "Aaa" to "Aa1," citing a decade-long rise in government debt and mounting interest payments.

According to Moody’s, the downgrade reflects the failure of successive U.S. administrations and Congress to implement meaningful measures to reverse the trend of large annual fiscal deficits and escalating debt-servicing costs. In a pointed statement, the agency declared: “Repeated inaction by lawmakers has led to rising fiscal strain, diminishing the long-term strength of U.S. credit.”

Bond Market Reacts Sharply: Yields Surge Across the Board

The bond market responded swiftly. The yield on the 30-year Treasury bond climbed to 5%, the 10-year rose to 4.5%, and the 2-year yield jumped to 4%—levels not seen in recent years. This surge reflects investor concern over the long-term fiscal outlook of the U.S. government.

The timing of the downgrade is especially critical. Just days earlier, a group of Republican lawmakers blocked progress on a controversial tax-cut package backed by former President Donald Trump, aimed at extending his 2017–2021 tax relief measures and introducing new cuts.

Experts Weigh In: Short-Term Dip or Long-Term Warning?

Benoit Anne, strategist at MFS Investment Management, cautioned that while the downgrade may only marginally dent investor appetite for U.S. assets in the short term, it serves as a reminder of deeper structural issues. “This is not yet a market-defining event,” Anne noted, “but it does chip away at confidence.”

Echoing that sentiment, Aditya Bhave, economist at Bank of America, stated that “with tax cuts and trade tariffs hanging by a thread, Moody’s seems to believe these policy dynamics will worsen the U.S. fiscal trajectory,” according to remarks published by CNBC.

U.S. Still Holds Strong—but No Longer Unassailable

Despite the downgrade, the U.S. remains near the top of Moody’s 21-tier credit scale, now sitting one notch below the highest rating. This latest move places Moody’s in alignment with Fitch and S&P, both of which previously stripped the U.S. of its triple-A status.

Historically, investors have turned to Treasury bonds as a safe haven in times of uncertainty—driving prices up and yields down. But today’s scenario challenges that pattern, with rising borrowing costs painting a new picture of global financial risk.

What Lies Ahead for America’s Fiscal Future?

With a high-stakes election approaching and national debt surpassing $34 trillion, the United States faces a monumental challenge in restoring fiscal stability. Moody’s warning may not be the final word, but it marks a significant inflection point that could reshape how the world views U.S. economic leadership in the years to come.

Thank you for subscribing to our newsletter. See you in the next edition.

Staff 360 Raw Magazine

Subscribe to our newsletter and receive exclusive insights straight to your inbox.

Sources /Press office official /Washington, D.C. –EFE/Washington/Moody’s

Photos & video stock social networks/Washington, D.C. –Moody’s/ archive/

For more information stay connected

@360RawMagazine

#360RawMagazine

#360RawMagazineDiscovery #360RawMagazineNEWS #360RawMagazinePRESS #360RawMagazineGoogle #360RawMagazineMIAMI #360RawMagazine