By Erik Wasson, Billy House and Ari Natter
House Speaker Kevin McCarthy expressed optimism Wednesday that White House and GOP negotiators would reach a deal in time to avert a potentially catastrophic US default.
The California Republican’s comments came after a four-hour meeting between his and President Joe Biden’s hand-picked negotiators, fueling optimism Congress will act before June 1, the date by which Treasury Secretary Janet Yellen has warned the US could run out of money to pay its bills.
“I still think we have time to get an agreement, and get it done,” McCarthy said after the meeting concluded.
McCarthy said there is no “set time” for him and Biden to meet. “I think at the appropriate time we will get back together,” he added.
Representatives for Biden and House Republicans began meeting about noon in White House Budget Director Shalanda Young’s office suite. The change in locale comes a day after Republican Patrick McHenry, one of McCarthy’s negotiators, bragged that the talks have all been held in the Capitol because, in his view, the GOP has the upper hand.
US stocks are showing increasing signs of concern over the standoff, with the S&P 500 index down 0.9% late Wednesday afternoon, after a 1.1% slump on Tuesday. In the Treasuries market, investors are demanding ever-higher premiums on bills that mature when the government is seen most at risk of default. Rates on Treasury bills due June 1 on Wednesday briefly surpassed 7%, comparable to yields on junk debt.
Yellen said Wednesday that the world is just seeing the beginnings of the potential market stress if the debt crisis continues.
JPMorgan Chase & Co. chief US economist Michael Feroli wrote to clients Wednesday warning that his team now puts the odds of hitting the June 1 “X-date” without a deal “at around 25% and rising.”
Yellen said the Biden administration’s focus is on completing a debt-limit deal rather than contingency planning for a default.
“We…
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