The loss of the latest triple-A rating by the United States sent stock markets tumbling, weakened the dollar and sent bond yields soaring. Analysts warn that the growing fiscal deficit and the cost of Trump's tax cuts are fueling uncertainty.

Financial markets started the week in negative territory following Moody's decision to downgrade the U.S. credit rating, which has ignited new alerts about the sustainability of the federal debt and the cost of President Donald Trump's policies.

Monday saw a day of turbulence in the stock markets, the bond market and the exchange rate. U.S. and European stocks fell, the dollar weakened against major currencies, and Treasury yields rebounded sharply. The 10-year bond jumped to 4.54%, while the 30-year yield surpassed 5%, its highest level in 18 months.

According to The New York Times, Moody's downgrade, announced last Friday, is in addition to the downgrades already made by S&P in 2011 and Fitch in 2023. With this decision, the three major agencies no longer consider the U.S. as a top-rated debt issuer. The measure, they explained, responds to "a rising trajectory of the fiscal deficit, increasing interest payments and the weak revenue-generating capacity of the State".

The news came at a particularly delicate moment. Congress is debating a bill to make permanent the tax cuts approved by Trump in 2017, an initiative that independent analysts say would add more than $4.8 trillion to the deficit over the next decade. The proposal passed a key stage on Sunday, being approved by the House Budget Committee, but still faces a tough legislative battle.

The New York Times also reported that Atlanta Fed President Raphael Bostic warned that Moody's downgrade could have "implications for the cost of capital and many other areas," which, he said, "could have a ripple effect on the economy. Speaking to CNBC, Bostic acknowledged that "there is a lot of turbulence right now."

Treasury Secretary Scott Bessent tried to downplay the news. In an interview with CNN, he called Moody's decision "a lagging indicator" and blamed the previous administration for the debt growth. "We didn't get here in the last 100 days," Bessent asserted. However, Moody's itself attributed the debt trend to "successive administrations and Congress," projecting that the federal deficit will approach 9% of GDP in 2035, up from 6.4% last year.

The combination of signals has caused nervousness among investors. George Saravelos, global head of currency research at Deutsche Bank, wrote in a note that "the lack of appetite for U.S. assets, coupled with an inflexible fiscal system that perpetuates high deficits, is making the market very nervous."

The impact was also felt in gold, whose price rose close to 2 % as a refuge against volatility. The dollar fell 1 % against the euro and recorded similar declines against the pound sterling and the yen. At the same time, oil prices also fell by more than 1%, affected by global economic uncertainty.

Moody's decision, added to the questioning of Trump's spending plan and the Federal Reserve's stalled interest rate cut, could mark a turning point in the perception of US assets as a safe haven. As The New York Times noted, the coordinated market reaction suggests that confidence in the world's largest economy is deteriorating.

With information from AFP