The Uncertainty of US Treasurys Amid Bond-Market Crash and Default Risk

The reputation of US Treasurys as a safe-haven asset has been questioned due to a historic bond sell-off and rising default fears. Moody's recent downgrade of the US credit outlook to "negative" and concerns over massive deficits and rising debt have raised doubts about the safety of Treasurys. While some argue that Treasurys still serve as a safe haven, others point to liquidity and interest rate risks, as well as the increasing cost of insuring against default. As concerns over debt sustainability and bond prices mount, investors have become more cautious, demanding higher compensation for holding Treasurys. However, some analysts believe that in a risk-off environment, Treasurys would still attract safe-haven flows.