Chat participant rendered markdown HTML gets output as raw string before rendered correctly

Does this issue occur when all extensions are disabled?: Yes

• VS Code Version: 1.97.0-insider
• OS Version: macOS

Steps to Reproduce:

Given the code:

  const message = new vscode.MarkdownString(
    `<sup><span style="color:var(--vscode-editorCodeLens-foreground);">$(info) Wallaby is using ${model.name}</span></sup>\n`,
  );
  message.supportHtml = true;
  message.supportThemeIcons = true;

  chatStream.markdown(message);

where chatStream is vscode.ChatResponseStream, the end user result is that it starts rendering raw text and then renders formatted HTML: