Debt Ceiling Standoff

Political brinkmanship in Washington adds to concerns about the economy.

Markets are keeping a wary eye on Washington, where the urgency is growing for lawmakers to resolve the debt ceiling standoff before the federal government runs out of money—which the Treasury says could be as early as June 1st. Although the stock market has been relatively sanguine, concerns have seeped into the Treasury market. Meanwhile, global markets are grappling with diverging views on what central banks will do next.

Washington: Stalemate

Concern about the debt ceiling intensified in Washington and on Wall Street after a May 9th White House meeting between the president and top Congressional leaders produced little progress on a stalemate that threatens to roil the markets and hurt the economy.

The meeting was the first face-to-face discussion between President Joe Biden and House Speaker Kevin McCarthy (R-Calif.) since February. Both reiterated their incompatible positions. The president and congressional Democrats continue to stand by their long-held position that Congress should pass a clean debt ceiling increase with no strings attached, while Republicans say they will only consider lifting the debt ceiling if it is paired with spending cuts and other policy priorities.