“However, given the significant uncertainty that now exists with regard to unresolved tax and spending policies for 2013, it is not possible to predict the effective duration of these measures,” Geithner wrote to congressional leaders.
Moody’s Investors Service reiterated it may downgrade the U.S. next year if the government fails to address the rising percentage of debt to gross domestic product during budget negotiations. Standard & Poor’s stripped the U.S. of its top AAA rating on Aug. 5, 2011.
“Adoption of a sustainable plan that results in a declining debt ratio over the medium term would be supportive of maintaining the Aaa rating with a stable outlook,” Moody’s said in a report. “An outcome during 2013 that does not show such a debt trajectory could lead to a downgrade of the rating.”
Moody’s and S&P have negative outlooks on the U.S.
The Fed bought $4.6 billion of Treasuries maturing from December 2018 to November 2020 Thursday, according to the Fed Bank of New York. It was part of the central bank’s effort to cap borrowing costs by exchanging short-term securities from its holdings for longer-term debt in a program that ends this month.
Treasuries erased early losses as a gauge of confidence among U.S. consumers declined more than forecast. The Conference Board’s index of sentiment fell to 65.1 in December from a revised 71.5 reading the prior month, figures from the New York- based private research group showed. A Bloomberg survey forecast a decline to 70.