Structural demand for US debt robust regardless of market volatility: Moody’s

The structural demand for US debt which underpins the dollar-based international monetary system stays robust in opposition to the backdrop of latest Treasury market volatility, Moody’s Investors Service mentioned on Monday.

The agency added US monetary regulators have undertaken a collection of measures to enhance Treasury market resilience and effectivity, and that it expects the market construction will proceed to evolve.

“Going forward, as the Fed reduces its Treasury holdings, foreign central banks, pension funds, insurance companies and households will be stabilizing factors in the market,” Moody’s mentioned in a shopper be aware.

Earlier this month, Moody’s lowered its outlook on the US credit standing to “negative” from “stable” citing giant fiscal deficits and a decline in debt affordability.

 

Federal spending and political polarization have been a rising concern for traders, contributing to a selloff that took US authorities bond costs to their lowest ranges in 16 years in mid-October.

Treasury yields have soared this yr on expectations the Federal Reserve will hold financial coverage tight, in addition to on US-focused fiscal issues.

(Reporting by Manya Saini in Bengaluru; Editing by Shounak Dasgupta)