Before the financial crisis took hold in 2008, the basis-point prices of credit default swaps on United States treasury notes — essentially, bets on a federal debt default — were generally in the single digits. These days they are an order of magnitude higher, and have risen by 35 percent over the past year. By contrast, over the same period, the prices for credit default swaps on Japanese debt and German debt have stayed roughly unchanged, and those for Britain have fallen by about 20 percent. So there may well be market reaction specifically to developments in the United States.
Silver is actually writing there about the wisdom of depending on an "orderly panic" in the bond market to force a solution to the debt ceiling negotiations. But the short answer is, no you do not want to bet against treasuries. No, the government is not going to go into default.
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