Supercommittee on the Verge of Failure: Time to Worry?

Less than a week before its Nov. 23 deadline, the congressional “supercommittee” charged with shrinking the deficit by $1.2 trillion is still far from a deal, according to reports out this afternoon.

Are investors worried? They don’t appear to care much, at least for the moment. A failure to come to a deal would trigger a wide swatch of budget cuts in everything from social programs to defense starting in 2013. But those cuts could presumably be reversed by the new Congress that will take office in 2013.

In fact, RBC Capital chief econo0mist Tom Porcelli expects Congress to wriggle its way out, claiming there is a high probability that “They do not come to an agreement on deficit reduction and they find a way to void the�triggers… Some politicians in DC have already made this crystal clear�already. In fact, Senators McCain (R-Az) and Graham (R-SC) are spearheading an effort to get�around the triggers on the basis that they would �do irreparable damage to our national security� ��as 50% would hit defense.”

And investors don’t seem to be worrying about the possibility that credit agencies will once again downgrade the U.S. rating, like Standard & Poor’s did in August. The yield on the 10-year Treasury, for instance, fell0.043 percentage points on the week to 2.012%.