First: the price of credit default swaps (CDS) against US treasuries has spiked. And very, very unusually, the price of a one year CDS is now higher than the price of a five year CDS.
Second: the stock market AND the bond market are down today. It is fairly common for investors to rotate from one into the other depending on outlook. When both are down sharply, as is happening today, it means investors are selling everything and keeping their money as money. That is - Wall Street is starting to put their investment money under their mattress.
Supporting data beneath the orange squiggle of power.
^GSPC 1:43PM 1,314.33 Down 17.61 Down 1.32%
^IXIC 1:43PM 2,786.67 Down 53.29 Down 1.88%
^RUT 1:28PM 806.28 Down 18.55 Down 2.25%
^DJI 1:42PM 12,390.72 Down 110.58 Down 0.88%
^MID 1:43PM 957.07 Down 20.29 Down 2.08%
^TYX 1:28PM 4.3090 Up 0.0320 Up 0.75%
^TNX 1:28PM 3.0010 Up 0.05 Up 1.69%
^FVX 1:28PM 1.5330 Up 0.55 Up 55.95%
Some of you may be looking at that chart and thinking "Some of those indices are up, not down". The prices quoted for treasury bonds is the yield, which is the effective interest rate. When the yield goes up on a bond, that means the price of the bond has gone down. It helps if you think of a bond as a promise to pay X dollars every year. If a bond has a yield of 4%, that means I give you $100, and every year for the life of the bond you give me $4. At the end of the life of the bond, you give me back my $100. If instead of giving you $100 I give you $99, the yield on the bond is 100/99*4=4.04%.
This chart from NPR shows the time history of the US Treasury CDS price.
As may be seen, the price paid to insure against default has gone up by a factor of 6 since January, and has more than doubled in July.
This matters for several reasons. First, it suggests that at least some of the big money is protected against default - but since the party on the other side of the CDS is likely also big money, that's a wash. Secondly, the guys on Wall Street have intelligence that makes the CIA look like amateur hour for things that affect their wealth, so this is a very nice synopsis of the best insider information in one handy number.
Once upon a time the default result of a financial panic was called a "flight to quality" - sell stocks and corporate bonds, buy US treasuries. The Republicans have destroyed the image of US bonds as quality. It will be years or decades before that image can be restored.
Also worth noting - US treasuries are sold at auction. No one wants to pay full price for something that is dropping in value like a rock. This will require this week's treasury auctions to sell more bonds to achieve the same level of cash for the government. In other words, the GOP has added to the deficit already, just by playing games.
If the US citizens understood how morally and intellectually bankrupt these elephant scat are, the GOP would cease to exist.