Salient to Investors:

  • Moody’s Investors Service said the US Aaa credit rating outlook remains stable, short-term outlooks for most indicators are positive, but spending on social programs will put pressure on budget deficits and the rating toward the end of the decade. Steven Hess at Moody’s sees accelerating economic growth as budget deficits fall substantially and remain well below 3% of GDP for years to come and therefore no pressure on the rating.
  • In 314 upgrades, downgrades and outlook changes by Moody’s and S&P from the 1970s to 2012, in almost half the instances, government bond yields fell when the rating action suggested a climb and vice versa.
  • Economists expect the debt-to-GDP ratio to fall to 2.6% in 2015 versus 2.9% in 2014.
  • Christopher Sullivan at UNFCU said the US economy is better positioned, the fiscal position is mending and continues to improve.
  • The CBO said the deficit to GDP ratio will fall in 2014 on falling unemployment and rising corporate profits.
  • Ira Jersey at Credit Suisse said the US is in a better fiscal situation.

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