Markets Prepare for U.S. Default

Wall Street is preparing for a potential U.S. default by developing a playbook to keep the financial markets functioning. The plan, organized by the Securities Industry and Financial Markets Association (Sifma), allows investors to continue trading all U.S. Treasurys, even those with overdue interest or principal payments. The Treasury would prioritize debt payments over other spending and hold debt auctions to raise necessary funds. However, the playbook does not guarantee calm in the bond market, as disruptions in computer systems and investor reluctance to trade matured Treasurys could create problems. While the Treasury missing a debt payment is not certain, investors are cautious, avoiding Treasury bills maturing in early June.