The Impending Threat of America's Debt Default and Its Consequences.

The possibility of America defaulting on its sovereign bonds due to the debt-ceiling is causing concern among investors. The Treasury Secretary has warned that the government may run out of cash and accounting maneuvers as soon as June 1st. If the government defaults, it would cause chaos in global markets, and investors are rushing to protect themselves. The cost to insure five-year Treasuries against default has quadrupled over the past 12 months. While a solution will probably be found, even the best-case scenario would drain liquidity from the market and may push yields higher.