Fresh from a budget fight so raw that the Republican speaker ofthe U.S. House cursed the Democratic leader of the Senate outsidethe Oval Office, President Barack Obama and Congress are headingfor an even bigger confrontation over raising the nation's debtlimit.

U.S. Treasury bond investors — who most directly bear the riskof a government default — aren't alarmed. In a sign of thedisconnect between Washington and Wall Street, investors remainconfident the two sides will compromise rather than inflict whatObama called “catastrophic” consequences. Yields on long-term U.S.debt are near record lows.

“It's ugly in Washington, and getting uglier,” said MatthewDuch, a fund manager in Bethesda, Maryland, for CalvertInvestments, which oversees more than $12 billion in assets. “Butthat is just resulting in even lower rates as the market is muchmore concerned about growth than if the U.S. will be able to paytheir bills.”