My theory is the fed isn't all powerful with interest rates. They have target rates they wish to achieve and one way is to buy and sell treasuries on the open market. Treasury prices are still up to the results of an auction process. But there is usually a secondary market you can buy from from treasuries that have already been awarded to someone.
The debt itself is not fearful. Being unable to sell treasuries at low costs will be a big change. The fear is that todays political climate could indeed be too messed up to act in time so that congress has the authority to spend. Missed payments are going to be a problem if it happens.
Your theory proved correct in the 1970s, things got so messed up "everything" rose, both unemployment and inflation driving a stake into the heart of the Phillips Curve, and what people demanded to buy private or Federal debt. The latter got so bad "Carter bonds" were created, denominated in West German Marks or Swiss Francs: https://en.wikipedia.org/wiki/Carter_bonds
The debt itself is not fearful. Being unable to sell treasuries at low costs will be a big change. The fear is that todays political climate could indeed be too messed up to act in time so that congress has the authority to spend. Missed payments are going to be a problem if it happens.
But I'm not a finance expert.