FX.co ★ U.S. Futures Sink After Moody’s Downgrade

U.S. stock futures took a significant hit due to growing fiscal concerns that were exacerbated by Moody’s recent decision to lower the U.S.’ long-standing triple-A credit rating to Aa1. The credit rating agency highlighted increasing entitlement expenditures, rising interest costs, and ongoing political deadlock as major risks to maintaining debt sustainability. In a televised interview, Treasury Secretary Scott Bessent sought to minimize the impact of the downgrade by suggesting that Moody’s serves more as a "lagging indicator." This downgrade followed a particularly strong week on Wall Street fueled by optimism over a temporary tariff reduction agreement between the U.S. and China, which helped alleviate trade tensions. Additionally, President Trump revealed plans to converse with Russian President Vladimir Putin on Monday to discuss reducing tensions related to the war in Ukraine. Market losses were partially mitigated by data indicating a second consecutive monthly rise in U.S. capital inflows in March, providing some level of reassurance regarding international investor confidence.