The Impending Chaos of a US Debt Default: Market Signals and Warnings.

Financial markets predict that a U.S. debt default most likely won’t happen, but suggest that a catastrophe is still all too possible, with the probabilities adjusting swiftly as the news shifts. The pricing of short-term Treasury securities reveals that traders believe there is a reasonable possibility that the United States Treasury will miss a payment of interest or principal on securities that come due in early June. Credit default swaps imply that investors should worry about a default, but probably don’t need to worry too much, at least not quite yet. A prediction market gives a higher probability of a default, of about 10 percent.