Is there to be a late twist to an extraordinary day?
Updated (7:51pm New York time): The WSJ reports that US treasury officials found a $2,000bn error in S&P’s mathematics, amid heated discussion on Friday afternoon about the rating agency’s plan to downgrade the US sovereign.
The US government is braced for a downgrade, according to ABC News.
A government official tells ABC News that the federal government is expecting and preparing for bond rating agency Standard & Poor’s to downgrade the rating of US debt from its current AAA value.
Officials reasons given will be the political confusion surrounding the process of raising the debt ceiling, and lack of confidence that the political system will be able to agree to more deficit reduction. A source says Republicans saying that they refuse to accept any tax increases as part of a larger deal will be part of the reason cited.
The official was unsure if the bond rating would be AA+ or AA
Updates to follow.
CNBC also reporting the White House on downgrade watch ‘negative’.
USAA anyone?
U.S. government officials are bracing for the rating agency Standard & Poor’s to downgrade the country’s credit as early as this evening or take other possible action, according to someone familiar with the matter.
Throughout Friday, markets were rife with speculation that S&P, which has had a negative outlook on the U.S. since April 18, would downgrade the country’s credit from its current triple-A level.
On July 14, S&P put the government on a credit watch with negative implications, meaning there was at least a one in two chance the U.S.’s long-term debt would be downgraded within 90 days.
An S&P spokesman declined to comment on any possible plans for a downgrade or statement later Friday.
On Tuesday, both Fitch and Moody’s backed their triple-A rating on the U.S.—but with caveats.
Related link:
A few quick thoughts on the likely pending S&P downgrade - Marginal Revolution