Senate Majority Leader Harry Reid said yesterday that he had a “productive conversation” with Minority Leader Mitch McConnell without reaching a conclusion on a plan to send to the Democratic-controlled chamber for a vote.
“The discussions were substantive and we’ll continue those discussions” Reid said on the Senate floor as the parties remained divided over federal spending levels. “I’m optimistic about the prospects for a positive conclusion.”
While optimism also was expressed by Democratic and Republican senators on Sunday television talk shows, there was little evidence to support their words as the government’s partial shutdown entered its third week and the markets weighed the short time left to avert a U.S. default.
U.S. stocks fell, halting the biggest three-day advance since January. The Standard & Poor’s 500 Index (CME:SPZ13) dropped 0.5% at 9:40 a.m. in New York and the Stoxx Europe 600 Index slipped 0.2%. Japan’s currency appreciated for the first time in five days against the dollar (FOREX:USDJPY) and the cost of insuring against losses on Treasuries increased.
The U.S. cash bond market is shut for Columbus Day. Gold gained 1% and natural gas jumped to the highest level in almost four months.
The Senate opens today’s session at 2 p.m. in Washington with votes on unrelated items scheduled for 5:30 p.m.
The House meets at noon today and Republican leaders are weighing whether to bring up their plans for a short-term debt limit increase, said two aides who spoke on condition of anonymity to discuss strategy.
The details of that bill and timing for House action haven’t been decided, the aides said.
The congressional deadlock over increasing the U.S. debt ceiling from $16.7 trillion is threatening the U.S. and world economies, said International Monetary Fund Managing Director Christine Lagarde.
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