Fitch Renews Warning To US: Raise Debt Ceiling Or Risk Ratings Cut

Fitch Ratings has warned Congressthat failure to lift the borrowing limit would prompt a review of the country’s debt standing. 

From Forbes: 

The ratings agency expects the borrowing limit to be raised above its current $16 trillion level, “and that the risk of a U.S. sovereign default remains extremely low,” but reiterated previous comments that “failure to raise the debt ceiling in a timely manner will prompt a formal review of the U.S. sovereign ratings.”    

... In August 11, Congress failed at an initial bid to increase the debt ceiling, prompting Standard & Poor’s to cut the government’s AAA rating to AA+. A failure this time around could lead to a downgrade from Fitch.   Moody's, which has also warned that the gridlock in Washington could lead it to follow S&P’s lead, has said it will likely make its call by the end of 2013. 

... It remains to be seen whether the market will have the same violent reaction to a debt ceiling impasse it did in 2011, when the lack of a deal and subsequent S&P downgrade sparked a wave of volatility and a week of violent swings in the equity market.

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The market volatility last time was a nausea-inducing roller-coaster ride.  However, the downgrade did not stem the flow of funds into the US; debt rating notwithstanding, we continued to be seen as a safe haven.