US funds sector review – are US regional banks in trouble?

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We look at the state of play for US regional banks, what’s next for US inflation and interest rates, and how the US stock market is coping.

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

25 September 2023

US banks have remained in the firing line after the banking crises back in March. This time Moody’s, one of the big three credit rating agencies in the US, has downgraded the credit ratings of 10 small-to-medium sized banks and placed six larger banks under review.

Credit ratings are used to determine the quality and strength of a company’s financials and risk of them defaulting on their debts.

Moody’s classify their highest rating as Aaa and their lowest rating as C. Anything rated at or below Ba by Moody’s (or BB by other rating agencies) is deemed speculative grade (or high yield) and anything above is deemed to be investment grade.

Moody’s have said the downgrade in small and medium-sized banks reflects issues in the banking sector like