If you’re not talking about the head of the IMF today, then the only thing left really is the debt ceiling, which we officially reached today ($14.294 trillion for anyone who’s counting).

While estimates are that it will take until August for the US to actually default on its debt obligations, the concern in the short term is how Wall Street sees the situation and how that will be reflected in the bond market and in mortgage interest rates.

So I asked a few experts:

Michael Barr/Fmr. Asst. Treasury Secretary for Financial Institutions

“If the US continues to bump up against the debt limit but Treasury uses “extraordinary measures” to keep the US from exceeding the limit, then the damage is likely to be modest and short-term. I would expect rates to rise, temporarily, by up to low single-digit basis points.

It is a bit hard to forecast exactly what the effect will be. Prior experience suggests low single digit bps, but there are a number of factors in play today that were not present in previous debt ceiling crises: fragile economy, fragile housing finance sector, fragile home prices and sales, F/F in conservatorship, no securitization to speak of, higher debt to GDP ratio, turmoil in Europe (exacerbated by DSK’s arrest), extremely high levels of US dollar reserves already in China, extremely low Treasury rates.

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