As Bloomberg reports, the spread between the July 28 and the August 4 T-Bills, two instruments that mature within a week of each other, and which differ by absolutely nothing else, has just surged to the widest ever, as investors are happy to roll away from long maturity instruments (even if longer maturity in this case means one week down the road) and dump securities that mature after the debt ceiling deadline for fear they will not get repaid. As for what is happening with the August 25 Bill, see second chart below. Yes: the market is starting to price in the unmentionable.
Chart 1: July 28 vs August 4 Bills. Of course, if the deal is done, this spread will collapse, and assuming a few thousand turns of leverage someone may even retire early; On the other hand if the spread blows up, and America defaults, who will be there to collect? Still, nobody seems to be rushing to put it on.
Chart 2: And the Aug 25 Bill. Oops.