The downgrade follows a change in the outlook on the sovereign in 2023 due to wider fiscal deficit and higher interest payments, and comes as Congress debates tax and spending plans that could deepen the fiscal hole.

Stocks and U.S. government bond prices at first fell sharply early in Monday’s trading, but they trimmed their losses as the day progressed. The S&P 500 went from a loss of 1.1% to a modest gain of 0.2% before drifting through the afternoon.

Bond investors see a lot to be worried about from Washington policy. That could have repercussions for taxpayers.

Moody's downgrade of the U.S. sovereign credit rating late Friday appeared to have a modest impact on corporate bond market activity on Monday, as spreads widened slightly and new bond sales started the week softer than expected.

Maryland has lost its triple-A bond rating from Moody’s. Maryland has held this top rating since 1973, and state officials have long cited it as a sign of state’s strong fiscal stewardship.

The debt downgrade is raising concerns that investors could reevaluate their appetite for U.S. government bonds, with the potential for rising yields.