Debt ceiling negotiations ran into trouble and spooked markets on Friday, although analysts said setbacks in the process were to be expected.
“We’ve decided to take a break, because it’s just not productive,” said Republican Rep. Garret Graves of Louisiana, House Speaker Kevin McCarthy’s deputy.
Graves also suggested that the Biden White House representatives in the talks were being “unreasonable.”
“Until people are willing to have reasonable conversations about how to move forward and do the right thing, then we’re not going to sit here and talk to ourselves,” he said. the congressman told reporters.
Asked if negotiators would meet in person over the weekend, Graves said, “I’m not sure right now.”
“We’re not there,” Graves also said, in a comment that indicated a deal was not imminent.
US stocks DJIA,
sold after his statements to reporters, and the three major equity indicators SPX,
closed with modest losses. Traders were also weighing remarks by Federal Reserve Chairman Jerome Powell as well as a report that Treasury Secretary Janet Yellen had said more bank mergers may be needed.
“There are real differences between the parties on budget issues and the talks will be difficult,” a White House official said. “The president’s team is working hard for a reasonable bipartisan solution that can pass the House and Senate.”
Rep. Patrick McHenry, a North Carolina Republican involved in the talks, said there were no plans for the negotiators to get back together on Friday, according to a Wall Street Journal report.
“This is a tough stop,” McHenry said. “We are in a very bad moment.”
McCarthy he told reporters that there needs to be “movement from the White House, and we don’t have any movement yet, so yes, we need to take a break.”
Stocks had advanced on Wednesday and Thursday, with gains credited in part to upbeat comments from Biden and McCarthy about the debt limit. Analysts suggested markets had become overly optimistic and Friday’s pullback was no surprise.
“Today’s signs of frustration displaced the happy conversation that took place for most of the week. We find this to be an unsurprising turn during any constructive negotiations,” said Kim Wallace and Sandra Namoos of 22V Research in a note
Terry Haines, founder of Pangea Policy, described Friday’s development as a “predictable bump in the winding road to negotiations,” adding that “what it means for the markets is that there is very little hope of a deal at the end of Sunday and that the negotiations will take place.” enter next week.”
Now read: Debt ceiling showdown: Here’s what could go into a bipartisan deal
And see: ‘Doomsday Machine’: Here’s What Could Happen If Debt Ceiling Breached
MarketWatch’s Robert Schroeder contributed to this report.