Forget the U.S. government shutdown, markets are most concerned about raising the debt ceiling and avoiding another U.S. debt downgrade, professor Jeremy Siegel of the Wharton School at the University of Pennsylvania told CNBC on Tuesday.
"The biggest fear is another downgrade of the debt such as S&P did two years ago," he said. The longer the U.S. government shutdown wears on, the greater the fear that when the debt ceiling needs to be raised, that it will be delayed. If that happens, the Treasury won't be able to pay its bills, and it could trigger another downgrade, he explained.
(Read more: Here comes the DC shutdown: What you need to know)
"The probability is very, very low but if there is any default or begin to default on U.S. Treasury bonds, there will be chaos in the market," he warned.