The U.S. will be downgraded to "selective default" (SD) if the debt ceiling isn't raised by mid-October and the governmnt fails to service a debt, says S&P, but there will be no change to the AA+ credit rating as long as the impasse is short-lived. "This sort of political brinkmanship is the dominant reason the rating is no longer AAA."
The story provides an opportunity to check on Treasurys amid the imminent government shutdown. The 10-year yield fell as low as 2.59% overnight, but has returned back to 2.61%, off one basis point on the session.
Earlier: The Chicago PMI prints at 55.7 in September, beating expectations of 54.4 and prior of 53.