Recent Moody’s downgrade of U.S. sovereign debt to Aa1 in May 2025 aligned all three major agencies below AAA for the first time, citing persistent deficits, rising debt-to-GDP above 120 percent, and elevated interest costs absorbing nearly 20 percent of federal revenue. With ratings now at AA+/Aa1 levels and outlooks generally stable, agencies appear unlikely to act again absent sharp fiscal deterioration or governance shocks before 2027. Trader consensus reflected in the 69 percent “No” probability incorporates these post-downgrade alignments alongside ongoing debt-ceiling debates and reconciliation measures, while noting that further cuts would require material worsening beyond current trajectories priced into Treasury yields and agency communications. Key near-term catalysts include fiscal year 2027 budget outcomes and any renewed debt-limit standoffs.