In the statement made by Fitch, it was stated that the Democrats' control of one or both houses of Congress after the upcoming midterm elections in the USA will increase the possibility of pursuing a risky policy regarding the debt limit and budget appropriations.
It was emphasized in the statement that this could put more pressure on the already high level of financial deficit, and said, "Regardless of the election result, structural factors affecting the financial credit indicators of the USA will continue to exist." The expression was used.
In the statement, it was stated that the budget deficit of the US federal government increased to approximately 2 trillion dollars in fiscal year 2026, and its ratio to Gross Domestic Product (GDP) increased to 6.1 percent.
It was stated in the statement that the ratio of the general government budget deficit to GDP is expected to increase to 7.5 percent in 2026 and 7.6 percent in 2027, and that these ratios will be the highest level among countries in the "AA" credit rating category.
In the statement, it was stated that if current policies continue, the ratio of general government debt to GDP is predicted to reach 123 percent by the end of 2028 and 129 percent in 2030.
773 BILLION DOLLARS LEFT TO REACH THE DEBT LIMIT
In the statement, it was noted that the current temporary budget will expire on December 11, and that the Congress, which will still be under the control of Republicans on this date, may agree to extend it and increase or suspend the debt limit.
In the statement, it was emphasized that if the Democrats gain the majority in one or both houses of Congress, budget negotiations may become difficult in the new period that will start in January and the risk of a government shutdown may increase.
It was stated in the statement that if the current Congress does not address the debt limit issue, this issue will become a big test for the new Congress, and that the debt limit can be reached in the first quarter of 2027.
In the statement, it was stated that as of October 26, the US debt subject to the debt limit was at the level of 40.93 trillion dollars, and this amount was 773 billion dollars below the current limit.
RISKS RELATED TO ARTIFICIAL INTELLIGENCE AND MARKET VOLATILITY INCREASE AS WE ENTER 2027
It was stated that the global credit risk environment has worsened since the publication of the organization's last Global Risk Outlook report, and a deterioration trend has been observed in all main risks in the third quarter of 2026.
It was stated in the statement that market indicators gave warning signals, and that the increase in bond yields reflected the increase in real interest rates and that stock markets showed that question marks about whether artificial intelligence investments may have been overdone in the last few months have increased.
In the statement, it was pointed out that the new president of the US Federal Reserve (Fed) adopted a more "hawkish" monetary policy stance, and it was reminded that the Fed unanimously decided to increase interest rates for the first time in 3 years in September.
In Fitch's statement, it was stated that the policy rate forecast was updated to 4.25 percent throughout 2027, taking into account the expectation that another interest rate increase may be made this year.
In the statement, it was stated that in Fitch's basic scenario, bond yields are expected to stabilize and the US 10-year bond interest rate will decrease to 4.8 percent by the end of 2027, but there is a risk that the yields will exceed the forecasts.
In the statement, it was pointed out that if the disruptions in oil shipments through the Strait of Hormuz continue beyond the first quarter of 2027, higher oil prices than expected in the basic scenario may be seen, and it was noted that other factors may cause bond yields to rise above expectations.
It was emphasized that the rapid growth in artificial intelligence-related investments will continue to be one of the main agenda items in terms of credit risks.
It was stated in the statement that a significant re-evaluation of the expectations of generating revenue from artificial intelligence in the long term could lead to a sharp decrease in capital expenditures, and that such a development could have impacts on companies in the artificial intelligence value chain and broader capital markets.
