This week that two key indicators of investor confidence in the U.S. Treasury – the Treasury yield curve and credit default swap spreads – are showing signs of growing pressure as lawmakers struggle to reach a compromise on the debt ceiling.

Spreads on credit default swaps have risen to levels not seen in decades, leading economists at Morgan Stanley to believe the risk of an unexpected default is at least twice as high as it was during the debt-ceiling battle in 2011, when S&P The 500 index fell 15%.

The Credit Default Swap Index (CDX) is a benchmark index that tracks a basket of U.S. and emerging market single-issuer credit default swaps. CDX tracks total returns for the various sovereign bond segments.

Investors can use the CDX's tracking to monitor their own portfolios against this benchmark and adjust their holdings accordingly. The CDX helps to hedge risk by protecting bond investors against default, and traders use CDX indexes to speculate about potential changes in issuers’ credit quality.

CDX is itself a tradable security: a credit market derivative. But the CDX index also functions as a shell, or container, as it is made up of a collection of other credit derivatives: credit default swaps (CDS).

U.S. Congress' failure to raise the debt ceiling before the U.S. Treasury runs out of money will make it impossible to meet its fiscal obligations, while also leading to a financial crisis that could trigger a market crash followed by a prolonged recession.