Yeah ... Boehner has the votes to stop default and big money believes he will use them. It is clear to me that while it is possible (although HIGHLY unlikely) we could stop paying a few invoices for a few days our interest payments and maturing debt will be paid on time. Boehner knows the Masters of the party -- big business -- will call a halt to this Tea Party nonsense before we go over that cliff.
It's NOT "Tea Party nonsense", dumbass. It's Odumbo-ism, Communist, Socialistic bully politics. Support of Constitutional principles is what America needs... not more Odumbo dictator politics.
Bully politics? Isn't it all "bully" if you have the juice? BTW, I'll be sure to get right on changing my opinion because you don't care for it ... lol.
the real reason..because default or not, treasuries are still the safest asset on the planet at the moment. a treasury default would be bad for treasuries, but would be worse for everything else. A default will drive rates even lower as people flock to the safest asset during an economic crisis and deflation (lower rates) will also follow.
the definition of deflation does not refer to a decline in interest rates. it refers to the change in the price level of goods and services.
I wasn't looking to define deflation, just give several reasons why a default would drive rates even lower, but yes you are right.
The market always discounts big news like this, well in advance, that's why you do not see any major reaction, or so it seems. Personally I do not give a damn about the news or the so called "fundamentals" (it's just stupid noise), I look at the charts and the charts only.
Because if there's a default (especially a technical one, as the case at hand), the curve flattens aggressively. The bonds that suffer the most are the really short-dated ones (e.g. bills, 2y, etc), as you can observe even today. At the same time, the back end outperforms because of the hit to the economy. Given that TBT is 20y+ treasuries, it's actually behaving pretty rationally.