Amid default bluster in Washington, bond markets remain cool

The bond investors who lend trillions of dollars to the U.S. government are still playing it cool.

With just over two weeks to go before the United States is at risk of defaulting on its financial obligations in the absence of a deal to raise a legal debt limit, global investors are still willing to buy Treasury bonds at rates that are very low by historical standards.

Fluctuations in the bond market in recent days have been driven by economic news, not the latest drama in Washington. The interest rate the government must pay to borrow money for two years, 0.36 percent Friday, is actually down a bit from a week ago. Treasury bills set to be repaid in the first few weeks of August are trading at near-zero interest rates, implying that investors see virtually no risk of disruption to payments.

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