In the event of a default, Treasuries might no longer be eligible as collateral for repo agreements, according to James Kochan, Wells Fargo Funds Management LLC’s chief fixed-income strategist. The cheap funding for the holdings lowers the yields demanded on the investments, and unwinding the positions could amplify losses for lenders and borrowers.

If Treasuries were ejected from the market, “Well, holy cripes,” Kochan said in an interview.

In 2011, the last time Congress was gridlocked over the extension of the debt ceiling, repo rates rose as money-market funds pulled back because they didn’t want the risk of holding a security in default.

“A lot of this is about fear of the unknown,” said Scott Skyrm, a former head of repo and money markets for Newedge USA LLC and author of “The Money Noose: Jon Corzine and the Collapse of MF Global.” “There is no upside to being in the market in that environment, so people pull out.”