If Congress refuses to raise the debt ceiling, this could be an interesting year for Treasuries and long-term interest rates. This USA Today article
reviews the opinions of bond fund managers. The famous bond fund manager, Bill Gross, is the camp that thinks it could cause problems in the debt market:
managers agreed that the closer the government gets to the ceiling, the greater the risk that nervous investors will ditch Treasurys en masse. That would push long-term interest rates higher and risk derailing the economic recovery.
However, not all bond investors are worried:
Some bond investors support the Republican effort. Congress would be unlikely to tackle the budget deficit any other way [...] One reason we're so complacent in the U.S. is because are yields are so low