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US debt downgraded by Moody’s amid high yields; Fed rate cuts expected to boost bond prices in 2026

Market News
15 Apr 2026
24/7 Wall Street
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Bullish
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In May 2025, Moody’s downgraded US sovereign debt from Aaa to Aa1 due to unsustainable congressional spending, causing long bond yields to spike near 5%. Yields fluctuated but remained high into early 2026. A Federal Reserve interest rate cut is anticipated in mid-2026 under new leadership, expected to raise bond prices and lower yields. Investors may consider bond ETFs like Vanguard’s BND, VCIT, and VWOB for exposure to US and emerging market bonds with varying risk and yield profiles.

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