Toro
Diamond Member
As Toro pointed out indirectly and politely the markets have already downgraded treasuries: yields are going up and prices are going down on our bonds. State insolvencies and municipal requests for bankruptcy are on the rise. If federal law is amended to permit state bankruptcy IL, probably CA and possibly NY would be on the court house steps in relatively short order.
I'm not sure if Tbond yields rising is indicative of increasing fears of default or not. One would expect yields to rise at the beginning of a recovery. It could be that, too.
A better gauge is CDS spreads on US government debt, since CDS pays off if the government defaults. I haven't seen what CDS spreads have done since the tax cut deal.