Core Insights - The U.S. fiscal situation is under scrutiny, particularly following recent credit rating downgrades by Fitch and Moody's, which may lead to increased investor concern about rising deficits and foreign demand for U.S. Treasury bonds [1][1][1] Group 1 - In 2023, Fitch downgraded the U.S. credit rating to below the highest level, but this did not result in a lasting market reaction [1] - Analyst Gennadiy Goldberg from TD Securities suggests that the "Inflation Reduction Act" will continue to drive up the deficit, raising investor anxiety regarding the increasing deficit and potential lack of foreign demand for U.S. debt [1][1]

Core Viewpoint - The downgrade of the U.S. credit rating has significant implications for its economic outlook, suggesting a potential rise in long-term U.S. Treasury yields and indicating that the dollar may have peaked [1] Group 1: Economic Outlook - The deteriorating fiscal situation in the U.S. reinforces the expectation that long-term U.S. Treasury yields will rise over time [1] - The forecast for the 10-year U.S. Treasury yield is projected to reach 5.00% within the next 12 months [1] Group 2: Currency and Inflation - The threat to the safe-haven status of U.S. Treasuries highlights the view that the dollar has likely peaked [1] - The substantial U.S. deficit and inflation may compel the Federal Reserve to maintain higher interest rates for an extended period [1]