Moody’s Investor Service announced Tuesday that it would be unlikely that a government shutdown would affect the sovereign credit rating of the United States, Reuters reports via the Chicago Tribune.
Rather, it’s the impasse on the debt ceiling that will have a negative impact on financial markets, it said, adding that it expects the U.S. will raise the debt limit and avoid a shutdown. However, a failure to raise the cap on government spending could “theoretically affect all categories of government spending, including debt service,” the agency’s report said.
Although the U.S. stock market soared to new highs since the Federal Reserve announced last week in would continue its quantitative easing program ad infinitum, Bloomberg also warns of market risks and potential political setbacks associated with the hardening of positions on the federal budget and borrowing limit.
In Sept. 10 Bloomberg poll, 40 percent of global investors surveyed said they would pull back on U.S. markets in the event of a government shutdown.