Buffett Buys $10M of U.S. Treasurys, Shrugs Off Downgrade

News August 03, 2023 at 01:57 PM

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Berkshire Hathaway CEO Warren Buffett isn't making any changes based on Fitch's U.S. credit downgrade, which he said shouldn't be cause for concern, CNBC reported Thursday.

"Berkshire bought $10 billion in U.S. Treasurys last Monday. We bought $10 billion in Treasurys this Monday. And the only question for next Monday is whether we will buy $10 billion in 3-month or 6-month (Treasurys)," the investor told the network on Thursday.

The downgrade is something people shouldn't worry about, Buffett told CNBC.

See: Warren Buffett's 8 Nuggets of Investing Wisdom

Fitch cited expected fiscal deterioration, rising debt and deterioration in governance standards over 20 years in lowering its rating on the nation's long-term debt from AAA to AA+ this week.

While Fitch's concerns are reasonable, Buffett said they don't change his outlook on U.S. Treasurys and the dollar, CNBC reported.

Sam Millette, Commonwealth Financial Network's fixed income strategist, generally agrees. He said in a note Thursday that "the downgrade isn't likely to have a major long-term impact on markets."

"The U.S. has already had one AA+ credit rating for more than a decade with no major repercussions," Millette explained. "Plus, the Fitch downgrade didn't tell investors anything they didn't already know on the topics of rising political dysfunction and the state of the U.S. economy."

In his view, the economy "remains in good shape, and the headline-driven concerns can be safely put to rest, at least for the time being."

— Janet Levaux contributed to this report.

Photo: Bloomberg

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