(BFM Stock Exchange) – Yields of American bonds at the age of 10 and 30 years climbed this Monday, May 19 after Moody’s lowered this Friday, May 16, the sovereign note of the United States. The rating agency has pointed to the rise in debt in the United States and its cost for the federal budget. The country therefore loses its precious triple A.

Under close surveillance of investors, the US bond market is talking about him this Monday, May 19, with strong tensions.

About 4.4% on Friday, the borrowing rate at ten years from the United States changes this Monday, May 19, above 4.50% to 4.518% on the secondary market, that is to say that where investors exchange their debt titles between them.

A under tension market

The one at 30 operates an even more sustained rise, going from 4.897% on Friday, to exceed the symbolic threshold of 5% this Monday, and return to more explored levels since October 2023, recalls Bloomberg.

This increase in rates takes its roots in Moody’s’s decision to degrade the United States note on Friday, May 16.

The rating agency has passed its note on the American credit debt of AAA and demoted it to AA1, by adding a stable perspective. It motivates this degradation by the rise in debt of the United States and its cost for the federal budget.

She was the last of the three major agencies to make this decision. Fitch had degraded it with a notch, in AA+, in 2023, when S&P was the first rating agency to deprive the United States of its precious triple A in 2011.

“The lowering of the United States note from AAA to AA1 by Moody’s intervened a few hours after the budget commission of the House of Representatives failed to advance the bill” One, Big, Beautiful Bill “des Républicains”, recalls Barclays in a note published this Monday morning.

“A lowering of the Treasury note is not surprising in a context where the unlikely budgetary generosity continues to accelerate,” said Bloomberg Max Gokhman, Deputy Director of Investments at Franklin Templeton Investment Solutions.

“According to the first estimates, which is not final, the United States could see its primary deficit increase up to $ 5.800 billion in the next ten years. This is equivalent to a doubling of the debt growth rate compared to current legislative projections. All other things being equal, the federal debt could reach $ 59,000 billion, or 134% of GDP in 2034 and 211% 2055, against respectively 117% and 156% according to the previous estimates of the Congressional Budget Office “, explains this Monday morning Christopher Dembik, investment strategy advisor at Pictet AM.

“A dangerous downward spiral for American yields”

However, such an increase in rates is very large on this type of market and can result in a heavy increase in interest paid by the United States on their debt. In 2024, these interests of interest reached $ 949 billion, according to the Office Budget Congress.

“The costs of the debt service will continue to increase as large investors, both sovereign and institutional, will gradually start to trade treasure vouchers against other refuge values. Unfortunately, this can create a dangerous lower spiral for American yields, accentuate the downward pressure on the greenback and reduce the attraction of American actions,” adds Max Gokhman. Recall that the prices of bonds, by construction, evolve in the opposite direction of the yields required by investors.

The Trump administration logically rejected Moody’s decision and attacked his chief economist Mark Zandi “no one takes his” analysis “seriously. It has been proven that he was wrongly,” said Steven Cheung, director of communication for the White House on X (formerly Twitter)

The American secretary of the Treasury, Scott Bessent, for his part minimized the repercussions of Moody’s’s decision on American debt and estimated that the rating agency “is a train indicator”, in an interview with NBC News.

The European markets take note of this lowering without having to panic. On Monday, the CAC 40 dropped down 0.47% to 7,849.70 points, the Dax 40 in Frankfurt contracts slightly 0.2%, around 10:20 am.

On the side of Wall Street, the indices are expected with folds a little more marked this Monday. The Dow Jones is expected to open up 0.8%, the S&P 500 should contract by 1.20% when the Nasdaq loses 1.6% from the opening.