U.S. Treasury yields moved lower Wednesday as investors considered the outlook for the economy after Fitch Ratings downgraded the U.S.′ long-term foreign currency issuer default rating on Tuesday.
The yield on the 10-year Treasury was down by 3 basis points at 4.015% after hitting its highest level since early July on Tuesday. The 2-year Treasury yield was last trading more than 5 basis points lower at 4.858%.
Yields and prices have an inverted relationship and one basis point equals 0.01%.
Investors assessed the state of the U.S. economy as Fitch Ratings cut the U.S.′ long-term foreign currency issuer default rating from AAA to AA+ on Tuesday.
The agency referenced “fiscal deterioration over the next three years” as well as issues with governance standards and pressures related to growing general debt. Fitch had first placed the U.S. on negative watch during the debt ceiling crisis earlier this year and referred to the tensions on Tuesday.
“The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” it said.
Investors also looked ahead to key economic data that could provide clues about what is ahead for the U.S. economy and monetary policy.