Core Viewpoint - Moody's downgraded the U.S. sovereign credit rating from Aa3 to Aa1 due to increasing government debt and interest payment ratios, marking a significant warning signal for the financial markets [1][8]. Group 1: Impact on Financial Markets - Following Moody's downgrade, U.S. stock ETFs tracking the S&P 500 index fell by 1%, while the Nasdaq 100 ETF (QQQ) dropped by 1.3% in after-hours trading [4]. - The yield on the 10-year U.S. Treasury bond surged, approaching 4.5%, while the two-year Treasury yield reached a daily high of 4.006%, marking an increase of 1.17% [4]. Group 2: Factors Influencing U.S. Treasury Yields - The recent decline in U.S. Treasury prices is attributed to three main factors: 1. Adjustments in monetary policy expectations, with a shift towards a wait-and-see approach among Federal Reserve officials despite a slowdown in inflation [10]. 2. Increasing imbalance in supply and demand for U.S. Treasuries, with high issuance levels and upcoming debt repayment peaks [10]. 3. Growing concerns regarding the U.S. government's debt repayment capacity, exacerbated by rising federal debt levels and potential tax cuts [10][11]. Group 3: U.S. Debt Situation - The average daily increase in U.S. federal debt over the past year was $442 million, equating to approximately $5,121 per second, with over 30% of U.S. debt facing maturity and refinancing pressures within a year [11]. - The current public debt-to-GDP ratio stands at 97.8%, projected to reach a historical high of 107.2% by 2029, raising concerns among overseas investors about the sustainability of U.S. debt [11].