By Mike Dolan

LONDON (Reuters) - What matters in U.S. and global markets today

By Mike Dolan, Editor-At-Large, Financial Industry and Financial Markets

U.S. Treasury Secretary Scott Bessent responded "who cares?" to news that the U.S. had lost its last top-notch credit rating. Bond markets might beg to differ.

In today's deep dive, I discuss why investors should still be skeptical of sky-high U.S. stock market valuations. I get into all the market reactions below.

Today's Market Minute

* The European Union and Britain reached a tentative agreement on defence and security, fisheries and youth mobility ahead of a EU-UK summit on Monday, paving the way for British firms to participate in large EU defence contracts.

* U.S. President Donald Trump's sweeping tax-cut bill, which had been stalled for days by Republican infighting over spending cuts, won approval from a key congressional committee on Sunday in a rare victory for Trump and House Speaker Mike Johnson.

* The 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 possible lifting of U.S. sanctions on Iran's oil exports could deal a fatal blow to independent Chinese refineries that have thrived by processing Tehran’s discounted crude, while also putting further downward pressure on oil prices. Read the latest analysis from Reuters columnist Ron Bousso.

* Syria is seeking to reintegrate itself into the global economy after spending decades as a pariah under the rule of Bashar al-Assad, raising the question of whether the new government in Damascus will be expected to repay the massive debts the prior regime incurred while fighting. Check out the column by sovereign debt experts Lee Buchheit and Mitu Gulati.

U.S. credit grating

The 30-year U.S. Treasury yield topped 5% to hit its highest since October 2023 after Moody's on Friday stripped the United States of its AAA sovereign credit rating. It was the last of the three main credit ratings agencies to do so.

Ten-year yields also jumped about five basis points from Friday's close, the dollar slipped and Wall Street stock futures fell more than 1%.

Bessent used television interviews on Sunday to dismiss the downgrade, while also warning trade partners that they would get maximum tariffs if they did not offer deals in "good faith". This reignited trade tensions that had dissipated somewhat last week.

Trump added to corporate America's anxieties by insisting that Walmart "eat the tariffs" instead of blaming price increases on import duties imposed by his administration.