This prediction market addresses whether the United States will experience another sovereign credit rating downgrade before the end of 2026. A downgrade would occur if one of the three major credit rating agencies, Standard & Poor's, Moody's, or Fitch Ratings, lowers its assessment of the U.S. government's ability to repay its long-term debt obligations. The topic sits at the intersection of fiscal policy, political brinkmanship, and global financial stability, reflecting deep concerns about the trajectory of U.S. debt and deficits. The market's resolution depends on official announcements from these agencies, though a consensus of credible reporting will also be considered. Interest in this question surged following Fitch's downgrade of the U.S. long-term rating from AAA to AA+ in August 2023, citing expected fiscal deterioration, a high and growing general government debt burden, and erosion of governance relative to 'AAA' peers. This event marked only the second time in history a major agency had stripped the U.S. of its top-tier rating, following Standard & Poor's historic move in 2011. Market participants and observers are now focused on whether ongoing political polarization, persistent budget deficits, and rising debt servicing costs could trigger a similar action from Moody's, the last major agency maintaining a pristine AAA rating with a negative outlook. The outcome carries significant implications for global interest rates, the U.S. dollar's status, and investor confidence worldwide.

Historical Context

The modern history of U.S. credit ratings is defined by two pivotal downgrades. On August 5, 2011, Standard & Poor's downgraded the United States from AAA to AA+, citing political brinksmanship over the debt ceiling and a lack of credible plan to stabilize medium-term debt dynamics. This followed a protracted standoff in Congress that brought the nation to the edge of default. The downgrade sent shockwaves through global financial markets, with the S&P 500 index dropping nearly 7% the following day. For over a decade afterward, the U.S. maintained a split rating, with Moody's and Fitch keeping their top ratings but often issuing warnings. This changed on August 1, 2023, when Fitch Ratings downgraded the U.S. to AA+, citing 'a steady deterioration in standards of governance over the last 20 years' including repeated debt limit confrontations and last-minute resolutions. This action echoed S&P's concerns but was notable for occurring outside an immediate debt ceiling crisis, suggesting a deeper, structural critique of U.S. fiscal management. The precedent set by these events demonstrates that rating agencies are willing to act, and their concerns have shifted from acute political crises to chronic fiscal deterioration.

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