MNI EXCLUSIVE: MNI INTERVIEW: BOE Too Reliant On Output Gap, Ducks Trump

Recapping sovereign ratings actions today:

• S&P affirms Italy's Long-Term Local Currency Debt Rating at BBB, outlook remains stable
• S&P affirms the UK's Long-Term Local Currency Debt Rating at AA, outlook remains stable
• Scope downgraded France to AA- (from AA) with a stable outlook
• S&P did not affirm/update the ratings of Greece or the Netherlands as part of their semi-annual review of the sovereigns.

The US's September budget balance came in very close to expectations with a $64B surplus, just the 2nd monthly surplus posted in the 2024 fiscal year just ended (Monthly Treasury Statement here - PDF). 

• For the fiscal year as a whole (Oct-Sep), the nominal deficit came in at $1.83T, equating to 6.4% of GDP - that's up from $1.70T in FY 2023 (6.2% of GDP).
• For the year, revenues rose by a little under $500B but outlays grew by over $600B. Notably, interest rose 29% to $1.13T (net $882B), with the net figure 3.06% of GDP: the highest since 1996. That came as the weighted average interest rate of debt outstanding rose 35bp on the year to 3.32%, while social security payments rose by $103B on higher cost of living increases and more retirees.
• The 2025 fiscal year deficit is not expected to be much changed as a percentage of GDP, though that could depend on the November election results.
• CBO director Phillip Swagel told MNI recently America has fiscal headroom in the near-term but spending is on an unsustainable track over the long-term (link).

• MNI: US SEP TREASURY BUDGET $64.3B