Late yesterday (Friday)....Moody’s Investors Service ame out and did a review of the US gov't financial situation. Basically, they went from 'stable' to 'negative'.
Their comment? “In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues. Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability.”
What they did was point their finger (they could have done this already in the first quarter of 2023) at the White House and say in blunt language....either increased taxes have to occur, or significant government cuts in spending has to occur.
Hurting the markets? I'd say on Monday.....you will start to see some uneasy feelings and people easing out of Wall Street.
As for more taxes or budget cuts? How? Where? With this group in the White House presently?
Moodys has basically placed the whole campaign in 2024 for either Republicans or Democrats....to be about this financial problem. Newsom able to sell his California 'skills' on this? No.
If there were some increase on taxation? It'd just twist up the recession into some turbo-situation.
Selling future treasury bills? Moodys just whacked that whole idea.
I'd rank this Friday event as one of the three biggest events of the year so far.
