Source: Wall Street News Moody's downgrade of the US credit rating continues to shake the US capital market.

Source: Wall Street News

Moody's downgrade of the US credit rating continues to shake the US capital market. "Sell - US" trades are on the rise, and the market is experiencing a "triple - kill" in stocks, bonds, and the exchange rate.

On Monday, the US Treasury bond market was hit by large - scale selling. The yield on the 30 - year Treasury bond continued to climb by about 10 basis points and broke through the psychological barrier of 5% in the afternoon, reaching the highest level since the middle of 2007, on par with the peak level in November 2023. The yield on the 10 - year Treasury bond also climbed above 4.5%, reflecting investors' concerns about the long - term fiscal health of the United States.

Strategists such as Michael Schumacher at Wells Fargo predicted in a report that "affected by Moody's downgrade, the yields on the 10 - year and 30 - year US Treasury bonds will rise by another 5 - 10 basis points."

Bonds in the eurozone extended their losses. The yields on 30 - year bonds in Italy and Portugal rose by 5 basis points.

As the uncertainty of the US debt problem rises, the US Dollar Index fell by 0.35%, while traditional safe - haven currencies such as the Japanese yen and the Swiss franc were boosted.

US stock futures also showed obvious cautious sentiment. Currently, Dow Jones Industrial Average futures are down nearly 0.9%, S&P 500 Index futures are down more than 1%, and Nasdaq 100 Index futures are down about 1.5%.

Before the opening of the US stock market, most star tech stocks were in decline. NVIDIA fell more than 2%. The company previously launched the Lepton cloud platform, building a global - scale AI factory, and will introduce the next - generation GB300 artificial intelligence system in the third quarter. Apple fell more than 2%, and Tesla fell more than 3%.

In addition, gold, a safe - haven asset, rose again today after a correction. The spot gold price once rose above $2,440 per ounce. Natasha Kaneva, the head of J.P. Morgan's commodity research, pointed out in a report: "Gold is benefiting from the deterioration of the US fiscal situation, and this trend is likely to continue for a considerable period of time."

**"Sell - US" Trading Strategy Revived**

Last week, Moody's Investors Service downgraded the US credit rating from the highest level of Aaa to Aa1 and adjusted the rating outlook from "negative" to "stable". Moody's clearly pointed out that the deteriorating fiscal deficit and political polarization in the United States are eroding the credit foundation of the world's largest economy.

Market analysts generally believe that Moody's adjustment of the rating outlook this time may lead investors to re - evaluate the risk premium of US assets, especially against the backdrop of the impending expiration of Trump's tax - cut policies and the uncertain direction of the fiscal policies of the new administration.

Wall Street traders have restarted the "sell - US" trading strategy. Scott Thiel, a strategist at BlackRock Investment Institute, said: "The market is re - evaluating the long - term debt sustainability of the United States. Moody's warning this time cannot be simply ignored."

Vasu Menon, the managing director of investment strategy at Oversea - Chinese Banking Corporation (Singapore), pointed out that the downgrade will intensify "growing concerns about the loss of American exceptionalism and make non - US assets more attractive to global equity investors, who have been shifting from US stocks to other markets such as European stocks."

Previously, S&P downgraded the US rating in 2011 and Fitch did so in 2023. Looking back at August 2011, when S&P first downgraded the US from AAA to AA +, the market experienced a panic moment, especially when the US Treasury bond market was hit by a large - scale sell - off. On the day of the downgrade, the 10 - year US Treasury bond was sold off heavily, and its yield rose by 16 basis points.

**Disclaimer**: The views in this article represent only the personal views of the author and do not constitute investment advice on this platform. This platform makes no guarantees regarding the accuracy, completeness, originality, and timeliness of the article information, nor will it assume responsibility for any losses arising from the use or reliance on the article information.