There are good reasons why markets took the latest U.S. credit rating downgrade on the chin, but that will offer cold comfort to investors warily eyeing the country's deteriorating fiscal health.

U.S. stocks mostly eked slim gains overnight, but Moody's downgrade of the U.S.' credit rating gripped the bond market.

Treasury yield surges past 5% as Moody's strips last AAA rating. The 30-year climbed above 5.00% for the first time since April's tariff announcement, while the 10-year spiked 10 basis points to 4.54% amid escalating funding costs.

Longer-dated bond yields touched 5%, after the U.S. lost its last triple-A credit rating and a tax bill that would worsen the U.S. budget deficit [passed a key hurdle](

That appeared to be the case at the open: equities fell, and Treasury yields rose fast. But things settled down just an hour later. The S&P 500 finished the day flat, and yields on benchmark 10-year Treasuries were down by just three basis points.

U.S. Treasury yields spiked on Monday after Moody’s downgraded the U.S.’ credit rating, citing fiscal concerns.

Treasury yields declined in early European hours, having traded sideways in Asia, as investors started to buy Treasurys on the weakness prompted by Moody’s downgrading the U.S.

Treasury Secretary Scott Bessent has acknowledged that Walmart, the largest U.S. retailer, may pass along some of the costs from President Donald Trump’s tariffs to its shoppers through higher prices.

In an interview with CNN’s Jake Tapper, Treasury Secretary Scott Bessent defends Qatar’s $400 million luxury jet gift to President Donald Trump, stating the plane ‘would be a gift to the American government.

U.S. Treasury Secretary Scott Bessent will attend the Group of Seven finance leaders' meeting in Canada next week and will seek to refocus the group on addressing trade imbalances and non-market economic practices,

"So, if we were to give too much certainty to the other countries, then they would play us in the negotiations," Bessent said of ongoing trade talks.