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The Daily Capital
NEWS & MARKETS · Lesson 96

Sovereign downgrades: what actually changes when a country is cut

Daily Desk · Editorial5 min read
S&P stripped the United States of its AAA in August 2011. Treasuries rallied. The downgrade wasn't news — it was a press release about something the market already knew.

On 5 August 2011, S&P downgraded United States debt from AAA to AA+. The obvious prediction — borrowing costs rise — was wrong. Treasury prices rallied and 10-year yields fell over the following weeks. Fitch cut the US to AA+ in August 2023 and Moody's cut it to Aa1 in May 2025, with similarly undramatic results in the Treasury market.

— Educational, not financial advice.