Moody's: Stable outlook on US' AAA rating reflects view that debt limit will be raised

Moody’s Investors Service noted on Tuesday that their stable outlook on the United States' AAA rating reflect their view that the debt limit will be raised and the US will meed its debt-service obligation on time, per Reuters.

Additional takeaways

"US Democratic party is likely to use the budgetary reconciliation process to raise the debt limit in time to avoid missed interest payment."

"In event that debt limit is not raised, Treasury would prioritize interest payments over other expenses to preserve the credit of the US government."

"A delay in raising the debt limit would be costly."

"However unexpected, if the US missed an interest payment, it would have negative credit and rating implications."

Market reaction

The market mood remains upbeat after this report and the S&P 500 Index was last seen gaining 1.25% on the day at 4,354.