The move came as Republicans seek to approve a large package of tax cuts, spending hikes and safety-net reductions which could add trillions of dollars in U.S. debt.

The news triggered a US bond sell-off on Monday. US 30-Year Treasury yields, the ones with the longest maturity date issued by the US Department of the Treasury, spiked to 5%, very close to the 5.08% multi-decade high they reached in October 2023, before retreating somewhat and closing at 4.91%.

Moody’s warns that a much larger number of economies will suffer indirectly through slowing economic growth, declining commodity prices, depreciating currencies, and rising investor risk aversion.

White House National Economic Council Director Kevin Hassett criticized Moody’s Ratings over its decision to lower the US credit rating, calling the move backward-looking and saying the Trump administration is committed to lowering federal spending.

A U.S. sovereign downgrade by Moody's has exacerbated investor worries about a looming debt time-bomb that could spur bond market vigilantes who want to see more fiscal restraint from Washington. The ratings agency cut America's pristine sovereign credit rating by one notch on Friday,

U.S. stock futures point to a lower open, a day after stocks made a comeback to close higher despite Moody's stripping the U.S. of its top AAA rating.