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Fitch Unimpressed By Debt Deal, GDP; Markets Unimpressed By Fitch

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S&P has made it so enticing to get involved in U.S. debt politics that the other agencies are jumping on the bandwagon. And Washington can't win: while S&P continues to talk a big game about downgrading the U.S. for not cutting enough spending, Fitch is pinning its ratings outlook to GDP growth, which someeconomists will tell you is not going to come by cutting government spending in a recession.

Fitch Ratings does not rule out slapping a negative outlook on the U.S. AAA rating when it concludes a review of the country later this month, the agency's top analyst for the United States said on Tuesday. ...

"The downward revisions of the GDP were bigger than we expected and a source of concern," Riley said. "There could be a rating action which could include a revision of the outlook. I certainly couldn't rule that out."

So the agencies think that today's debt deal either cuts too little spending or too much. Or probably both. Surely that will be terrible for Treasuries.

U.S. rating at risk of negative outlook [Reuters]

Also: Moody's confirms U.S. rating at AAA, outlook negative [Reuters]


Fitch Has Something To Say About Fudgie

"Manageable" but "raises questions." Fitch Ratings has downgraded JPMorgan Chase & Co.'s (JPM) Long-term Issuer Default Rating (IDR) to 'A+' from 'AA-' and its Short-term IDR to 'F1' from 'F1+'. Fitch has placed all parent and subsidiary long-term ratings on Rating Watch Negative. Fitch has also downgraded JPM's viability rating (VR) to 'a+' from 'aa-' and placed it on Rating Watch Negative. In addition, Fitch affirmed JPM's '1' support rating and 'A' support rating floor. The rating actions follow JPM's disclosure yesterday of a $2 billion trading loss on its synthetic credit positions in its Chief Investment Office (CIO). The positions were intended to hedge JPM's overall credit exposure, particularly during periods of credit stress. Fitch views the size of loss as manageable. That said, the magnitude of the loss and ongoing nature of these positions implies a lack of liquidity. It also raises questions regarding JPM's risk appetite, risk management framework, practices and oversight; all key credit factors. Fitch believes the potential reputational risk and risk governance issues raised at JPM are no longer consistent with an 'AA-' rating. Fitch Cuts JPMorgan Ratings [Reuters]