reports
- Nichola James
- Thomas R. Torgerson
Resilience of North American Economy Supports U.S. & Canadian Sovereig...
The U.S. credit rating has been in the spotlight in recent months. With Congress delaying passage of a debt ceiling increase until the U.S. Treasury was running very low on cash, we placed our rating of the United States Under Review with Negative implications (URN) on May 25. The passage of the Fiscal Responsibility Act on June 3 enabled the Treasury to increase debt issuance and quickly restore its cash position (from $23 billion on June 2 to $502 billion as of end-July). Just a week ago, we c...
- Michael Heydt
- Nichola James
- Michael Heydt
- Nichola James
DBRS Morningstar Confirms the United States at AAA, Stable Trend
DBRS, Inc. (DBRS Morningstar) confirmed the United States of America’s Long-Term Foreign and Local Currency – Issuer Ratings at AAA. In addition, DBRS Morningstar confirmed the United States of America’s Short-Term Foreign and Local Currency – Issuer Ratings at R-1 (high). The trend on all ratings is Stable.
- Michael Heydt
- Nichola James
- Thomas R. Torgerson
Baseline Macroeconomic Scenarios for Rated Sovereigns: June 2023 Updat...
In this commentary we provide an update to DBRS Morningstar’s Baseline Macroeconomic Scenarios. Key highlights include: -- Economic data continues to show resilience amid tighter financial conditions. Forecasts for 2023 continue to improve, while expectations for 2024 are generally worsening as projected slowdowns are pushed further out into the future. -- While a mild advanced economy recession will likely have a limited impact on rated sovereigns, the risk of a deeper downturn in 2024 canno...
3413Z GERMANY
1271Z FEDERAL REPUBLIC OF
GERMANY DENMARK
DENMARK KINGDOM OF
80710Z CANADA
1092Z GOVERNMENT OF
Lithuania UNITED STATES OF AMERICA
3344606Z UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND
1000Z LITHUANIA
ESTONIA REPUBLIC OF
PRCH LATVIA
CHINA REPUBLIC OF
1426Z ESTONIA
Belgium REPUBLIC OF
111136Z CHINA
1023Z PEOPLE'S REPUBLIC OF
Slovak UNITED MEXICAN STATES
1153Z BELGIUM
COLOMBIA KINGDOM OF
93187Z SLOVAK REPUBLIC
ARGENTINA COLOMBIA
1480Z REPUBLIC OF
Austria ARGENTINA
1233Z REPUBLIC OF
NORWAY AUSTRIA
1841Z REPUBLIC OF
3343903 NORWAY
CYPRUS KINGDOM OF
EUROPE SPAIN
1004Z KINGDOM OF
1110Z CYPRUS
1266Z REPUBLIC OF
IRELAND HELLENIC REPUBLIC
1179Z LUXEMBOURG
SWEDEN GRAND DUCHY OF
1306Z IRELAND
CN REPUBLIC OF
2103Z SWEDEN
172369Z KINGDOM OF
LATAM FINLAND
Japan REPUBLIC OF
1319293D ITALY
SLOVENIA REPUBLIC OF
1091Z URUGUAY
344758Z ORIENTAL REPUBLIC OF
5753Z JAPAN
223727Z SLOVENIA
1323Z REPUBLIC OF
1533Z SWISS CONFEDERATION
1545Z MALTA
ASIA REPUBLIC OF
1174Z FRANCE
Portugal REPUBLIC OF
1504Z BRAZIL
EM FEDERATIVE REPUBLIC OF
EMKT THE NETHERLANDS
ENEW KINGDOM OF
NI SINGAPORE
TOPEM REPUBLIC OF
TOPL PORTUGAL
REPUBLIC OF
INDIA
REPUBLIC OF
- Michael Heydt
- Thomas R. Torgerson
North America Macroeconomic Update: Resilient Economies Call For Tight...
DBRS Morningstar released its semiannual North America Macroeconomic Update. The U.S. and Canadian economies continue to show remarkable resilience in spite of tighter monetary policy. Households are spending at a robust pace, supported by healthy balance sheets and tight labor markets. The inflation outlook is clearly improving, but returning to the two percent target could still be challenging. The Federal Reserve and the Bank of Canada are responding to resilient economies with higher rates f...
- Michael Heydt
- Thomas R. Torgerson
DBRS Morningstar Continues to Assess the Impact of Polarization on U.S...
DBRS Morningstar placed the U.S. ratings Under Review with Negative Implications on May 25, 2023. The rating action reflected the risk of Congress failing to increase or suspend the debt ceiling in a timely manner, particularly in the context of heightened political polarization. The passage of the Fiscal Responsibility Act of 2023 removes any near-term threat of payment delays or default, and enables the Treasury to pay its obligations on time. The rating nonetheless remains Under Review as we ...
- Michael Heydt
- Nichola James
- Michael Heydt
- Nichola James
DBRS Morningstar Places United States Ratings Under Review With Negati...
DBRS, Inc. (DBRS Morningstar) placed the United States of America’s Long-Term Foreign and Local Currency – Issuer Ratings of AAA Under Review with Negative Implications. In addition, DBRS Morningstar placed the United States of America’s Short-Term Foreign and Local Currency – Issuer Ratings of R-1 (high) Under Review with Negative Implications.
- Michael Heydt
- Michael Heydt
- Thomas R. Torgerson
United States: Consequences of Failing to Lift the Debt Ceiling
In this commentary we discuss the potential consequences of Congress failing to lift the debt ceiling in a timely manner. We assume in this analysis that the polarized political atmosphere delays passage of the debt ceiling well into the summer months. If this were to be the case, we take the view that the consequences for the U.S. economy and financial system would be highly negative – and significantly worse and longer-lasting if the Treasury misses any debt payments. Key highlights include:...
- Michael Heydt
- Thomas R. Torgerson
The U.S. AAA Rating and the Debt Ceiling Standoff
The credit fundamentals underpinning the AAA rating of the United States are, in many ways, unparalleled. DBRS Morningstar has thus far maintained a AAA rating on the U.S. because we still believe it is highly likely that Congress will raise the debt ceiling prior to the X-date and the U.S. Treasury will continue to meet all of its obligations. However, we are concerned that political polarization in the context of a divided congress poses some risk to the U.S. government’s willingness to ensure...
- Nichola James
- Thomas R. Torgerson
Baseline Macroeconomic Scenarios for Rated Sovereigns: April 2023 Upda...
This commentary provides an update to DBRS Morningstar's Baseline Macroeconomic Scenarios. These baseline scenarios provide our estimate of the current market consensus, and are drawn from a simple median calculation across various external contributor forecasts. In this update, we discuss the deteriorating outlook for 2024. To date, we note that the March 2023 bank failures have had only a modest impact on forecasts. We continue to see considerable downside risks to the baseline. Key Highligh...
3413Z GERMANY
1271Z FEDERAL REPUBLIC OF
GERMANY DENMARK
DENMARK KINGDOM OF
80710Z CANADA
1092Z GOVERNMENT OF
Lithuania UNITED STATES OF AMERICA
3344606Z UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND
1000Z LITHUANIA
ESTONIA REPUBLIC OF
PRCH LATVIA
CHINA REPUBLIC OF
1426Z ESTONIA
Belgium REPUBLIC OF
111136Z CHINA
1023Z PEOPLE'S REPUBLIC OF
Slovak UNITED MEXICAN STATES
1153Z BELGIUM
COLOMBIA KINGDOM OF
93187Z SLOVAK REPUBLIC
ARGENTINA COLOMBIA
1480Z REPUBLIC OF
Austria ARGENTINA
1233Z REPUBLIC OF
NORWAY AUSTRIA
1841Z REPUBLIC OF
3343903 NORWAY
CYPRUS KINGDOM OF
EUROPE SPAIN
1004Z KINGDOM OF
1110Z CYPRUS
1266Z REPUBLIC OF
IRELAND HELLENIC REPUBLIC
1179Z LUXEMBOURG
SWEDEN GRAND DUCHY OF
1306Z IRELAND
CN REPUBLIC OF
2103Z SWEDEN
172369Z KINGDOM OF
LATAM FINLAND
Japan REPUBLIC OF
1319293D ITALY
SLOVENIA REPUBLIC OF
1091Z URUGUAY
344758Z ORIENTAL REPUBLIC OF
5753Z JAPAN
223727Z SLOVENIA
1323Z REPUBLIC OF
1533Z SWISS CONFEDERATION
1545Z MALTA
ASIA REPUBLIC OF
1174Z FRANCE
Portugal REPUBLIC OF
1504Z BRAZIL
EM FEDERATIVE REPUBLIC OF
EMKT THE NETHERLANDS
ENEW KINGDOM OF
NI SINGAPORE
TOPEM REPUBLIC OF
TOPL PORTUGAL
REPUBLIC OF
INDIA
REPUBLIC OF
- Michael Heydt
- Nichola James
- Michael Heydt
- Nichola James
DBRS Morningstar Confirms the United States of America at AAA, Stable ...
DBRS, Inc. (DBRS Morningstar) confirmed the United States of America’s Long-Term Foreign and Local Currency – Issuer Ratings at AAA. At the same time, DBRS Morningstar confirmed the Short-term Foreign and Local Currency – Issuer Ratings at R-1 (high). The trend on all ratings is Stable.
- Michael Heydt
- Michael Heydt
- Thomas R. Torgerson
U.S. Economic Outlook More Challenging Following Bank Failures
Over the weekend, federal authorities in the U.S. responded aggressively to the failures of SVB Financial Group and Signature Bank (both unrated by DBRS Morningstar) in order to calm financial markets and minimize the adverse effects on the real economy. In our view, these actions should reduce the likelihood of contagion, thereby minimizing any impact on the near-term U.S. economic outlook. However, the fallout could, on the margin, bring forward the expected deterioration in economic condition...
- Carlo Capuano
- Javier Rouillet
- Thomas R. Torgerson
Prolonged Monetary Policy Tightening Could Exacerbate the Decline in H...
A more aggressive and prolonged monetary policy tightening in Canada, the United Kingdom, and the United States during 2023 and 2024 would likely have a negative impact on housing prices and on economic growth. Current market expectations are for these respective countries' central banks to significantly slow or pause their rate hike cycles in coming months. If this assumption proves incorrect and interest rates continue to move higher, this could weigh not only on investment but also on consume...
- Nichola James
- Thomas R. Torgerson
Baseline Macroeconomic Scenarios for Rated Sovereigns: December 2022 U...
This commentary provides an update to DBRS Morningstar’s Baseline Macroeconomic Scenarios. These baseline scenarios provide our estimate of the current market consensus, and are drawn from a simple median calculation across various external contributor forecasts. In this update, we discuss the ongoing monetary tightening and bleak outlook for 2023. Key highlights include: -- Forecasts for 2023 have deteriorated in recent months. Growth will be very weak or negative for most major economies. -- ...
3413Z GERMANY
1271Z FEDERAL REPUBLIC OF
GERMANY DENMARK
DENMARK KINGDOM OF
80710Z CANADA
1092Z GOVERNMENT OF
Lithuania UNITED STATES OF AMERICA
3344606Z UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND
1000Z LITHUANIA
ESTONIA REPUBLIC OF
1426Z LATVIA
Belgium REPUBLIC OF
111136Z ESTONIA
1023Z REPUBLIC OF
Slovak UNITED MEXICAN STATES
1153Z BELGIUM
COLOMBIA KINGDOM OF
93187Z SLOVAK REPUBLIC
ARGENTINA COLOMBIA
1480Z REPUBLIC OF
Austria ARGENTINA
1233Z REPUBLIC OF
NORWAY AUSTRIA
1841Z REPUBLIC OF
3343903 NORWAY
CYPRUS KINGDOM OF
EUROPE SPAIN
1110Z KINGDOM OF
1266Z CYPRUS
IRELAND REPUBLIC OF
1179Z LUXEMBOURG
SWEDEN GRAND DUCHY OF
1306Z IRELAND
CN REPUBLIC OF
2103Z SWEDEN
172369Z KINGDOM OF
LATAM FINLAND
Japan REPUBLIC OF
1319293D ITALY
SLOVENIA REPUBLIC OF
1091Z URUGUAY
344758Z ORIENTAL REPUBLIC OF
5753Z JAPAN
223727Z SLOVENIA
1323Z REPUBLIC OF
1533Z SWISS CONFEDERATION
1545Z MALTA
ASIA REPUBLIC OF
1174Z FRANCE
Portugal REPUBLIC OF
1504Z BRAZIL
EM FEDERATIVE REPUBLIC OF
EMKT THE NETHERLANDS
ENEW KINGDOM OF
NI SINGAPORE
TOPEM REPUBLIC OF
TOPL PORTUGAL
45793Z REPUBLIC OF
INDIA
REPUBLIC OF
CHILE
REPUBLIC OF
- Michael Heydt
- Thomas R. Torgerson
North America Macroeconomic Update: Slowing Growth, Slowing Inflation
DBRS Morningstar released its semiannual North America Macroeconomic Update. While third quarter headline GDP growth figures suggest that the U.S. and Canada continued to grow at a strong pace, the composition of growth reveals that both economies are slowing amid rapidly rising interest rates. Headline inflation has peaked but strong cost pressure for services could slow the pace of disinflation, particularly as labor markets remain exceptionally tight. Against this backdrop, the monetary tight...
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