The cost of insuring exposure to U.S. government debt has been rising. Investors are pricing in the increased concerns around the unresolved debt ceiling, several industry watchers said. The surge in CDS prices is likely a “short-lived” reaction while traders wait for a new budget deal to raise the debt limit. Traders work on the floor of the New York Stock Exchange (NYSE) at the opening bell on May 27, 2025, in New York City. Timothy A. Clary | Afp | Getty Images
Investors are getting nervous the U.S. government might struggle to pay its debt — and they are snapping up insurance in case it defaults.
The cost of insuring exposure to U.S. government debt has been rising steadily and is hovering near its highest level in two years, according to LSEG data.
Spreads or premiums on U.S. 1-year credit default swaps were up at 52 basis points as of Wednesday from 16 basis points at the start of this year, LSEG data showed.
Credit default swaps are like insurance for investors. Buyers pay a