Even if the debt ceiling drama comes to a head, the U.S. will likely keep its top-notch credit rating from Moody's.
The country's Aaa rating and stable outlook is safe despite looming concerns about the government's inability to raise its borrowing limit by the autumn deadline, analysts led by Sarah Carlson, senior vice president in the sovereign risk group at Moody's Investors Service, wrote in a recent report.
"The U.S.' Aaa/stable rating is resilient to all of the political noise that we've been getting, and that we're likely to get around raising the debt ceiling. We think that, as has been the case every other time when the debt ceiling has needed to be increased, it will be. But it's often a pretty noisy process," Carlson elaborated Friday in an interview on CNBC's "Trading Nation. "
Were the ceiling not raised, interest payments would likely be prioritized, Carlson said. If the government were to miss a payment, that would have negative rating consequences; still, that scenario has an "extraordinarily low probability," she said.
This view is unchanged from the firm's outlook earlier this year, in which Moody's said the U.S. would retain its Aaa rating so long as it meets its interest payments. The Aaa rating is the highest such mark for sovereign debt.
Not all ratings agencies have such a positive stance.
Last week, Fitch Ratings said a failure by the government to raise the debt ceiling in several weeks and dip into the risk of defaulting on payments would push the firm to downgrade its own impeccable AAA rating on U.S. credit.
"Brinkmanship over the debt limit could ultimately have rating consequences, as failure to raise it would jeopardize the Treasury's ability to meet debt service and other obligations," Fitch said in a statement, Reuters reported.
In 2011, amid concerns in Congress about the debt ceiling, S&P downgraded the U.S. credit rating by one notch to AA+ from AAA – a move that caused considerable market volatility, and somewhat ironically led to additional demand for Treasury bonds at the time. The firm's rating has remained unchanged.
Moody's Carlson is particularly optimistic on the rating given the U.S. economy's underlying strength and limited vulnerability to "event risk." Still, she differentiates between the rating's tracking of the government's chances to repay government debt, and nondebt, obligations.
"When you're talking about nondebt obligations, it's obviously not a good thing if a government is late in paying those. But it's not something that the rating really speaks to," she said.
In a note to clients on Monday, BlackRock Investment Institute strategists wrote that while a looming U.S. shutdown over the budget could spur market volatility, any such spikes are to be viewed as "transitory and potential buying opportunities."
This worry, along with the Federal Reserve's path to unwind its balance sheet and the European Central Bank readying its own unwinding of fiscal stimulus, comes at a time when volatility is broadly muted.
"The U.S. budget showdown is now top of mind. We see a temporary Band-Aid budget and a raising of the debt ceiling. Yet a frayed relationship between the White House and Congress —and little scope for bipartisan collaboration — increases the potential for upsets such as a temporary government shutdown. Such events have sparked volatility in the past, but had no lasting impact," wrote Richard Turnill, global chief investment strategist at BlackRock.