Egan-Jones Cuts U.S. Rating One Step To AA

Egan-Jones Cuts U.S. Rating One Step to AA Citing Growing Debt -- Bloomberg Businessweek

Egan-Jones Ratings Co. cut the U.S. credit rating one step to AA, the second downgrade in nine months and two levels below its highest grade, with a negative outlook citing the nation’s increasing debt burden.

U.S. debt has increased to 100 percent of gross domestic product, while debt climbed 23.6 percent from 2008 to 2010, the credit-rating firm said in a statement today. Egan-Jones lowered the U.S. grade to AA+ in a July. Treasuries have gained 4.6 percent since the company first lowered the U.S. rating, according to Bank of America Merrill Lynch index data.

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Update: Egan-Jones Cuts US Credit Rating to 'AA,' Citing Debt -- CNBC

My Comment: In my professional life this is big news news .... correction .... this is huge news. Expect the other rating agencies to follow through with their own cuts in the next few months. Why is this significant .... the credit agency is bluntly saying that failure to cut the U.S. deficit will mean higher borrowing costs in the future. My prediction .... this is one more reason why I believe sequestration will happen to the defense budget.