S&P Affirms AA+ US Credit Rating, Cites Resilient Economy
2h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
us-credit-ratingsovereign-credit
Fazen Markets Editorial Desk
Collective editorial team · methodology
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S&P Global Ratings affirmed its long-term 'AA+' sovereign credit rating for the United States on Thursday, June 26, 2026. The agency also maintained its stable outlook on the rating. The decision reflects an assessment of the country's resilient, diversified economy and the U.S. dollar's status as the world's primary reserve currency. The affirmation arrives as the federal debt-to-GDP ratio exceeds 120% and the 10-year Treasury yield trades near 4.2%.
S&P's 'AA+' rating for the United States has been unchanged since August 5, 2011, when the agency made a historic one-notch downgrade from 'AAA'. That move followed a protracted political standoff over the debt ceiling. The United States has operated without a top-tier rating from S&P for nearly 15 years.
The current macro backdrop features a slowing but persistent inflation environment. The Federal Reserve's benchmark rate remains in a restrictive range above 5%, a level maintained since late 2023. This has increased the government's interest expense substantially. The U.S. budget deficit for the current fiscal year is projected to exceed $1.7 trillion.
S&P's rating committee was triggered by its scheduled annual review of U.S. sovereign creditworthiness. The agency specifically cited the economy's ability to absorb tighter monetary policy without a severe recession. Real GDP growth has averaged 2.1% over the past four quarters, outperforming many advanced economies. The stable outlook indicates S&P does not anticipate a rating change over the next two years.
S&P's rating action confirms the second-highest grade on its scale, one notch below the 'AAA' held by nations like Germany and Switzerland. The U.S.'s local currency short-term rating was affirmed at 'A-1+', the highest possible. For comparison, Moody's Investors Service maintains an 'Aaa' rating with a stable outlook on U.S. debt.
Key fiscal metrics underpinning the decision include a general government debt burden of 122% of GDP. The federal deficit is estimated at 6.3% of GDP for 2026. The economy's nominal GDP expanded by 5.7% in the first quarter of 2026. The unemployment rate has held below 4.0% for 22 consecutive months.
| Metric | U.S. (2026) | Germany (2026) | UK (2026) |
|---|---|---|---|
| S&P LT Rating | AA+ | AAA | AA |
| Debt/GDP | 122% | 65% | 105% |
| 10Y Yield | 4.18% | 2.45% | 4.55% |
Benchmark 10-year Treasury yields have risen 25 basis points year-to-date. This compares to a 6.8% total return for the S&P 500 index over the same period.
The affirmation removes a near-term tail risk of a downgrade, providing a marginal tailwind for U.S. Treasury prices. Bond market volatility, as measured by the MOVE Index, declined 5 basis points following the announcement. Long-duration Treasury ETFs like TLT and IEF typically benefit from sustained confidence in U.S. credit.
Financial sector stocks, particularly large custodian banks and asset managers, gain from stability in the sovereign debt that underpins their balance sheets. Tickers like JPM, BAC, and BLK hold massive portfolios of U.S. Treasuries. A stable rating environment supports their net interest margins and collateral values.
A key limitation is that the rating does not address the long-term trajectory of U.S. debt. S&P explicitly noted that absent fiscal consolidation, debt metrics will continue to deteriorate. The rating could face pressure after the 2028 election cycle if deficit trends do not reverse. Foreign official holdings of U.S. debt have declined for three consecutive quarters, indicating some reserve manager caution.
Positioning data shows institutional investors have been net sellers of long-term Treasuries for four weeks, according to weekly CFTC data. The affirmation may slow this selling pressure, particularly for real money accounts like pensions and insurers mandated to hold highly-rated debt.
The next major catalyst for U.S. credit assessment is the Treasury's quarterly refunding announcement on July 31, 2026. The size and composition of new debt issuance will signal the government's funding needs and market appetite. FOMC meeting minutes released on July 2 will provide further insight into the path of interest rates and their impact on debt servicing costs.
Market participants will monitor the 10-year Treasury yield's 200-day moving average at 4.25%. A sustained break above this level could signal renewed selling pressure despite the rating affirmation. The spread between 10-year and 2-year Treasury yields, currently inverted by 35 basis points, will be watched for signs of steepening.
The Congressional Budget Office will release its updated 10-year budget and economic outlook on August 20. This report will provide an official baseline for future debt projections. Any material upward revision to deficit forecasts could renew rating concerns later in the year.
A 'AA+' rating signifies a very strong capacity to meet financial commitments. For Treasury investors, it implies an extremely low expectation of default. This high-grade status ensures U.S. debt remains eligible for inclusion in major global bond indices and satisfies the investment mandates of conservative institutions like central banks and sovereign wealth funds. The rating directly supports demand, helping to keep borrowing costs lower than they would be for a lower-rated issuer.
The U.S. sovereign rating landscape is split. Moody's maintains its top 'Aaa' rating with a stable outlook, while Fitch Ratings aligns with S&P at 'AA+' with a stable outlook. Fitch downgraded the U.S. from 'AAA' in August 2023. This divergence reflects differing methodological weightings: Moody's places greater emphasis on the dollar's reserve currency status and economic depth, while S&P and FIFT give more weight to medium-term fiscal trajectory and governance.
Yes, indirectly. The U.S. sovereign rating acts as a ceiling for most domestic corporate ratings. A stable, high sovereign rating generally supports lower yields across the entire credit spectrum, including corporate bonds and mortgage-backed securities. Mortgage rates are closely tied to 10-year Treasury yields, which serve as a risk-free benchmark. A downgrade would increase that benchmark, raising borrowing costs for consumers and businesses.
S&P's affirmation signals confidence in U.S. economic resilience but does not resolve long-term fiscal sustainability concerns.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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