Debt-ceiling talks are at a ‘pause,’ says McCarthy deputy

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Debt-ceiling negotiations are at a “pause” on Friday, said Republican Rep. Garret Graves of Louisiana, a deputy for House Speaker Kevin McCarthy.

“We’ve decided to press pause, because it’s just not productive,” Graves said.

It wasn’t immediately clear how long the pause would last.

Graves also suggested the Biden White House’s representatives in the talks were being “unreasonable.”

“Until people are willing to have reasonable conversations about how you can actually move forward and do the right thing, then we’re not going to sit here and talk to ourselves,” the congressman told reporters.

When asked if negotiators would be meeting in person over the weekend, Graves said, “I’m not sure right now.”

“We’re not there,” Graves also said, in a remark that indicated a deal wasn’t imminent.

U.S. stocks
DJIA,
-0.26%

sold off after his remarks to reporters, and the S&P 500
SPX,
-0.13%

was recently trading lower.

“There are real differences between the parties on budget issues and talks will be difficult,” a White House official said. “The president’s team is working hard towards a reasonable bipartisan solution that can pass the House and the Senate.”

Traders also were assessing remarks from Federal Reserve chief Jerome Powell as well as a report that Treasury Secretary Janet Yellen had said more bank mergers may be necessary.

Separately, Senate Minority Leader Mitch McConnell, a Kentucky Republican, said Friday that it is “past time” for President Joe Biden to get serious about the negotiations.

Stocks advanced Wednesday and Thursday, with credit for the gains going in part to upbeat comments from Biden and McCarthy on the debt-limit standoff, but some analysts have warned that markets may have turned too optimistic.

“While we agree that recent developments represent a meaningful positive shift relative to a week or two ago, we caution investors not to overestimate how quick or smooth the path to the finish line will be,” said Tobin Marcus, senior U.S. policy and politics strategist at Evercore ISI, in a note.

Marcus added that “the expectations being set on timing are slightly unrealistic, which could lead to market concern over setbacks next week.”

Terry Haines, founder of Pangea Policy, described Friday’s pause as a “predictable bump in the winding negotiation road,” adding that “what it means for markets is that there’s very little hope of a deal by the end of Sunday, and that negotiations will go into next week.”

Now read: Debt-ceiling standoff: Here’s what could go into a bipartisan deal

And see: ‘Doomsday machine’: Here’s what could happen if the debt ceiling is breached

MarketWatch’s Robert Schroeder contributed to this report.



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