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How do I profit from a Treasury Default?



October 08, 2013 – Comments (5)

Well, I need your collective wisdom for this foolish (small “f”) question.

Proposition: political gridlock will not respond to prune juice or naval jelly, and the Treasury defaults on an interest payment on one of its issues.

I know that credit default swaps on Treasury paper exist, and are regularly bought and sold, but by the likes of GS. As a small investor to whom $2K is standard, is there a way for me to buy one of the CDSs or substitute?

I am fully cognizant that I could simply buy an ETF/ETN that is short Treasury paper, but that is not my question. I want a CDS that pays off, if and when there is a Treasury default.


5 Comments – Post Your Own

#1) On October 08, 2013 at 9:10 PM, outoffocus (23.80) wrote:

buy gold. lol

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#2) On October 08, 2013 at 9:24 PM, Mathman6577 (< 20) wrote:

Move to New Zealand. 

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#3) On October 08, 2013 at 9:29 PM, constructive (99.97) wrote:

No, brokers won't sell you CDS unless you have $50M plus.

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#4) On October 08, 2013 at 10:58 PM, awallejr (35.95) wrote:

What Mega said and even the others heheh.

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#5) On October 09, 2013 at 2:40 AM, somrh (85.89) wrote:

Why are CDS in treasuries a good bet? I mean, who will the counterparty be? And what exposure to treasuries do they have?

Why wouldn't - I don't know - every financial institution in the country fail in the event of default?

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