Ray Dalio, founding father of Bridgewater Associates LP, speaks throughout the Greenwich Financial Discussion board in Greenwich, Connecticut, US, on Tuesday, Oct. 3, 2023.
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Bridgewater Associates founder and billionaire Ray Dalio warned Monday that Moody’s downgrade of the U.S. sovereign credit standing understates the menace to U.S. Treasurys, saying the credit score company is not taking into consideration the danger of the federal authorities merely printing cash to pay its debt.
“It’s best to know that credit score rankings understate credit score dangers as a result of they solely price the danger of the federal government not paying its debt,” Dalio stated in a put up on social media platform X.
“They do not embody the better danger that the nations in debt will print cash to pay their money owed thus inflicting holders of the bonds to undergo losses from the decreased worth of the cash they’re getting (reasonably than from the decreased amount of cash they’re getting),” the Bridgewater founder stated.
Moody’s on Friday cut the U.S. credit rating one notch to Aa1 from Aaa, citing the federal authorities’s ballooning funds deficit and hovering curiosity funds on the debt. It was the final of the three main credit score businesses to downgrade the U.S. from the very best attainable score.
U.S. stocks fell Monday because the 30-year Treasury bond yield jumped to 4.995% and the 10-year observe yield climbed to 4.521% in response to Moody’s downgrade.
“Mentioned otherwise, for many who care concerning the worth of their cash, the dangers for U.S. authorities debt are better than the score businesses are conveying,” Dalio stated.
Bridgewater’s property beneath administration dropped 18% in 2024 to some $92 billion, Reuters reported in March, down from a latest peak of $150 billion in 2021.