Kevin McCarthy, Speaker of the House of Representatives, has been taking the pressure off Wall Street for a few minutes…
(Boursier.com) — Kevin McCarthy, Speaker of the House of Representatives, has been taking the pressure off Wall Street for a few minutes. The House Republican ‘speaker’ thus slipped that he thought it possible to make progress today on the issue of the US debt ceiling. The impasse on this thorny and urgent question had previously caused the indices to fall on Wall Street. The latter are now trying to limit their losses.
The two sides have yet to make any significant progress despite earlier talks that have been described as “productive”. Discussions at staff level are continuing, but fundamental differences remain on the proposed spending ceilings. The consensus remains for a short-term deal, but with the time elapsing before the famous ‘X date’, Treasuries maturing in early June materialize a greater risk of default…
Janet Yellen, Secretary of the Treasury, delivered a new warning today, indicating that it was “highly probable”, in the absence of an agreement, that the United States would lack sufficient cash at the start of June. She also assures that Biden has proposed changes that would result in a reduction … of 1,000 billion dollars in deficits. Yellen adds that she observes tension on the financial markets due to this deadlock situation…
Negotiations continued yesterday on Capitol Hill, but as a result no agreement emerged and the extent of progress is unclear, with House Speaker Kevin McCarthy saying there was not yet agree and some GOP attendees bemoaning a lack of progress — consistent with McCarthy’s caveat earlier about confusing “productive” with “progress.” The big sticking point has been the size of the proposed spending caps and the question of which spending areas could be exempted. McCarthy also pointed to GOP red lines that there would be no defense spending cuts or revenue-raising measures.
Negotiators still appear to be aiming for a deal by this week to give Congress enough time to debate and pass legislation before the debt ceiling ‘X date’. McCarthy has vowed he will not waive the rule requiring the House to have 72 hours to consider it. The markets are therefore a little more nervous now, even if they are still betting on the conclusion of an agreement. Some strategists believe that the actual X date could also be further away in June.
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