U.S. Treasury yields spiked on Monday after Moody’s downgraded the U.S.’ credit rating, citing fiscal concerns.
At 4:46 a.m. ET, the 30-year Treasury yield was up over 10 basis points to 5.021%. The 10-year yield also rose 10 basis points to reach 4.542%. Meanwhile, the 2-year Treasury yield was up over 2 basis points, reaching 4%.
One basis point is equivalent to 0.01%, and yields and prices move in opposite directions.
Investor concerns mounted after the rating agency Moody’s slashed the U.S.’ credit rating on Friday, bringing it down one notch from Aaa — the highest score — to Aa1. The agency attributed the downgrade to the increasing burden of financing the government’s budget deficit as well as the high cost of rolling over existing debt amid high interest rates.
“This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” it said in a statement.
Moody’s has assigned a “country ceiling rating” of Aaa to the U.S. since 1949. It’s now in line with all the major credit rating agencies which have continued to give the U.S. their second-highest available rating.
“This is a major symbolic move as Moody’s were the last of the major rating agencies to have the US at the top rating,” Deutsche Bank analysts said in a note.
In April, Treasury yields jumped after U.S. President Donald Trump implemented sweeping “reciprocal tariffs” on international trade partners. Concerns about tariffs and the U.S. debt burden are raising questions about whether Treasurys are still a safe haven asset.
Investors will also keep an eye out for speeches from U.S. central bank officials on Monday, including Atlanta Federal Reserve President Raphael Bostic, New York Fed President John Williams, and Dallas Fed President Lorie Logan.