‘It depends on how close to the brink we go’: Stock market turmoil likely if U.S. teeters toward a default, analysts say

The 2-year Treasury yield was at 4.6% on Thursday, while the 10-year Treasury yield was at 3.8%, according to FactSet. That’s up from 1.3% and 1.7%, respectively, last March.

What’s more, liquidity in the Treasury market has held up during the past three decades of debt-ceiling fights in Congress, according to Shankar Narayanan, head of trading research at Quantitative Brokers.

“The visible liquidity is not affected,” Narayanan said, pointing to historical trading data for Treasury futures and cash markets that signal a past resilience in U.S. government debt.

“It is no different this time,” he said. “But let’s see how that goes heading into the actual event.”