Moody's on Friday changed the outlook on the government of United States of America's ratings to "negative" from "stable".

The rating agency said it expects United States' fiscal deficits will remain very large, significantly weakening debt affordability.

Moody's affirmed the long-term issuer and senior unsecured ratings at "Aaa".

COMMENTS:

JACK ABLIN, CHIEF INVESTMENT OFFICER, CRESSET CAPITAL, CHICAGO

“It’s not about our ability to pay, it's just an indictment of our governance and how our Congress and essentially the legislature manage our finances.”

“I think that it really is a governance issue and I think the question is how we can navigate extending this debt ceiling and getting a budget passed.”

“I don’t think this is enough necessarily to rattle the cages of bond market vigilantes but I don’t see any light at the end of that governance tunnel.”

“The problem is ultimately, the only thing that is going to get Congress together is a crisis.”

QUINCY KROSBY, CHIEF GLOBAL STRATEGIST, LPL FINANCIAL, CHARLOTTE, NORTH CAROLINA:

"The markets have been through this a number of times over the last six, seven months. It's interesting that it's on a Friday, so the market has a couple of days to absorb this. But especially coming into the possibility of a government shutdown, it is yet another reminder that the ratings agencies are focused on the ability of the government to craft a deal.

"Even at the margin, this is not a positive, but the market will move on from this. Nonetheless, it is a reminder that the clock is ticking and the markets are moving closer and closer to understanding that we could go into another period of drama that could lead ultimately to the government shutting down."

CAROL SCHLEIF, CHIEF INVESTMENT OFFICER, BMO FAMILY OFFICE, MINNEAPOLIS, MN

"It's not entirely surprising given the given the level of debt. Moody's probably weighed on a combination of things. We've had sloppy auctions a couple of different times in the last few weeks. They might just think that coming up again on yet another potential government shutdown, and especially if they continue to push the candle on the road rather than solve the problem, that can have weighed on it too.

CHRISTOPHER HODGE, CHIEF ECONOMIST FOR THE U.S., NATIXIS

"It is hard to disagree with the rationale, with no reasonable expectation for fiscal consolidation any time soon. Deficits will remain large (even if not expanding) and as interest costs take up a larger share of the budget, the debt burden will continue to grow. This only adds to the dour mood music with political turmoil, looming potential government shutdown, and the weak 30-year auction yesterday. None of the information is new so it is hard to see a huge market implication, and this may in fact harden Republicans’ stance in the ongoing budget negotiations. So while this could increase the chance of a government shutdown next week, it also raises the odds of a slight pullback in discretionary spending in FY24"

KARINE JEAN-PIERRE, WHITE HOUSE PRESS SECRETARY

"Moody’s decision to change the U.S. outlook is yet another consequence of Congressional Republican extremism and dysfunction. Moody’s cites a number of recent actions by Congressional Republicans: repeatedly taking us to the brink of a government shutdown, shutting down Congress for three chaotic weeks because they were unable to unify around a leader, and holding the nation’s full faith and credit hostage. Whether it’s those actions or their continued attempts to increase the debt with tax giveaways for the wealthy and big corporations, extreme Congressional Republicans have undermined our economy at every turn."

WALLY ADEYEMO, DEPUTY SECRETARY OF THE TREASURY

"While the statement by Moody’s maintains the United States’ Aaa rating, we disagree with the shift to a negative outlook. The American economy remains strong, and Treasury securities are the world’s preeminent safe and liquid asset. The Biden Administration has demonstrated its commitment to fiscal sustainability, including through the more than $1 trillion in deficit reduction included in the June debt limit deal as well as President Biden’s budget proposals that would reduce the deficit by nearly $2.5 trillion over the next decade.”

(Compiled by the Global Finance & Markets Breaking News team)