Dow Jones limps higher as U.S. debt downgrade rattles Wall Street—traders shrug between sips of $8 oat milk lattes

Wall Street’s ’meh’ rally: The Dow clawed back 0.3% after Fitch’s downgrade—because nothing says ’strong economy’ like celebrating not crashing.

Debt ceiling déjà vu: Treasury yields spiked, then flatlined as algos digested the news faster than a Goldman Sachs intern chugging Red Bull.

Crypto traders yawned: Bitcoin barely budged—apparently ’safe haven’ status now applies to both gold and memecoins.

The U.S. has an ongoing debt problem: Moody’s

The U.S. credit rating is significant because it directly impacts the cost of government borrowing. When Treasury yields spike, the U.S. government has to pay more in interest on any newly issued Treasuries. This can create a vicious cycle where the interest cost hurts the ability to pay, causing investors to look elsewhere and increasing borrowing costs even further.

Moody’s cited escalating government deficits as the reason for the downgrade and stated that these have been a problem for a while. What is more, the agency directly referenced the possibility of extending 2017 tax cuts, which could add $4 trillion to the deficit.

“Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs. We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration,” Moody’s analysts.