The following audio episode  provides an in depth discussion of this weeks news from "The Edge".

 

  

🟡 The Weekly Edge – 22nd May 2025

 AAA Ain’t What It Used to Be
— Brought to you by the team at Gilt Investments

Welcome back to The Weekly Edge—your compass in a fog of ratings cuts, sovereign rollovers, and disappearing scoreboards. This week, the theme is clear: downgrade season has arrived, and no one’s off the hook.

From the U.S. to Australia, from central banks to state coffers, cracks are no longer subtle—they're structural.

📉 Moody’s Mayhem – The U.S. Gets Cut (and So Do the Banks)

The big headline? Moody’s has finally pulled the trigger—downgrading the United States credit rating from AAA to AA1, and hitting major U.S. banks (BofA, JPMorgan, Wells Fargo, State Street) in the process.

For some, ratings may feel outdated. But in the real world of institutional mandates, these cuts matter. They raise funding costs, shift capital flows, and spark global repricing events.

And the rationale? It’s blunt: ballooning debt and political paralysis.

🇦🇺 Australia – Still AAA, But for How Long?

Closer to home, Australia remains at AAA—but the whispers are getting louder.

Federal and state government debt is nearing $1.5 trillion, with $400 billion borrowed offshore. If a downgrade arrives, the cost of capital will rise, and so will the strain on households and corporates.

We might look calm—but that calm is resting on borrowed money and borrowed time.

🇨🇳 China – Scoreboard Blackout, Again

Transparency in China continues to fade. Over the past week, more economic indicators have been pulled from public view—including youth unemployment, land sales, toll road revenues, and even soy sauce production.

Markets rely on data to price risk. When the scoreboard disappears, risk premiums rise—and confidence erodes. China's data suppression is fast becoming a systemic volatility amplifier.

💸 The $324 Trillion Avalanche

The global debt machine keeps humming—and it’s reached $324 trillion in total obligations, up $7.5 trillion in just three months.

More than $26 trillion is due to mature this year alone, with $7 trillion from emerging markets and $19 trillion from developed nations. It’s not just a debt problem—it’s a rollover risk crisis.

🧭 Final Take – Ratings Don’t Lie, Even if We Wish They Did

Here’s what we’re watching:

• Moody’s finally joined S&P and Fitch in downgrading the U.S.

• Global debt is inflating faster than confidence.

• Central banks are trying to manage optics—not solve structural risk.

• Australia is steady—but slipping.

• China’s data suppression is turning opacity into a new normal.

This is not a market for the complacent. It’s a market for realists—who prioritize process over prediction, and keep their edge by watching what others ignore.

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Stay nimble. Stay informed. Stay steady.
We’ll see you next week on The Weekly Edge.

 

Disclaimer

This publication has been prepared by Gilt Investments Pty Ltd and is for informational purposes only. It contains general financial product advice that does not take into account your personal objectives, financial situation, or needs.

Before acting on any information contained herein, you should consider whether it is appropriate for your circumstances and seek independent professional advice.

While every effort has been made to ensure the accuracy and reliability of the information provided, Gilt Investments, its directors, employees, and agents make no representations or warranties, express or implied, as to the completeness, timeliness, or accuracy of the content. Any opinions expressed are subject to change without notice.

Gilt Investments disclaims all liability for any loss or damage arising from reliance on the information contained in this report. Past performance is not indicative of future results, and all investments involve risk.