In a surprise move, Fitch Ratings downgraded the U.S. Long-Term Foreign-Currency Issuer Default Rating from AAA to AA+, with a Stable Outlook. Ratings agency S&P took a similar action in 2011. Moody’s has kept its rating at AAA.
“The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to 'AA' and 'AAA' rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions,” Fitch said in a news release.
The immediate impact on the bond markets was limited, but markets are also reacting to the U.S. Treasury’s announcement that it is increasing its quarterly sale of long-term debt from $96 billion to $103 billion.
ADP: Employers added 324,000 jobs last month
ADP reported another month of outsized jobs growth, with 324,000 new jobs in July. You might recall that ADP reported the U.S. added 497,000 jobs in June, then revised the figure to 455,000. ADP’s June reports were also in sharp contrast to the government’s employment report, which showed an increase of 209,000 in the nonfarm payroll that month. The government will publish its July employment report on Friday.
Job openings fell below 9.6 million in June
Job openings dropped to 9.582 million in June, the lowest level since April 2021.
Outlook for manufacturing contraction continues
The ISM Manufacturing PMI was 46.4 in July, just slightly above 46.0 in June but still well below 50, the threshold marking the boundary between an outlook for contraction and for expansion.
Construction spending grew slower than expected in June
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