Asian markets sink as US debt ceiling talks stall
US President Joe Biden and House Speaker Kevin McCarthy have been meeting in an attempt to find a way to raise the borrowing ceiling, however, the stall in negotiations has been affecting markets.
On Wednesday, Asian markets mimicked Wall Street's losses as investors grew increasingly anxious about stalling US debt ceiling discussions to avoid a severe default.
The excitement that pervaded trade floors earlier this week has given way to worry, with numerous Republicans doubting an early June deadline, and some even claiming that the government is nowhere close to running out of cash in the first place.
All eyes are now on Washington, where US President Joe Biden and House Speaker Kevin McCarthy have been meeting in an attempt to find a way to raise the borrowing ceiling from the present $31.8 trillion.
On Monday both said their first one-on-one talks in months to avoid a calamitous debt default were "productive" but that disagreements were still blocking any possible deal.
The White House meeting came after Biden cut off a short trip to Asia to recommence talks in advance of the US Treasury's June 1 deadline for Congress to authorize more borrowing.
WATCH: “I’m confident that we’ll get the agreement on the budget and America will not default,” President Joe Biden said Wednesday at the White House.— Washington Week | PBS (@washingtonweek) May 17, 2023
He said he and lawmakers will come together “because there’s no alternative.” https://t.co/n2YIiFpKWM pic.twitter.com/tuwOF5LIV0
McCarthy told journalists that negotiators were going to "work through the night" to move the sides closer and that he and Biden would "talk every day to try to find a way to get this done."
A simple way for the Democrats to avoid default is to pass the Limit, Save, Grow Act in the Senate.— Kevin McCarthy (@SpeakerMcCarthy) May 23, 2023
With just 9 days left to go, Republicans remain the only ones in Washington who have actually done anything to lift the debt limit and avoid default. pic.twitter.com/QmkDJKHmro
White House Press Secretary Karine Jean-Pierre said some movement is being seen, and that "both sides have to understand that they're not going to get everything that they want."
US Treasury Secretary Janet Yellen warned that an agreement must be reached by June 1 or the US risks defaulting on its debt payments.
However, House Majority Leader Steve Scalise stated on Tuesday that he would like to "see more transparency on how they came to that date" of June 1.
"It looks like they're hedging now and opening the door to move that date back."
Texas Rep. Chip Roy called the threat of a default a "manufactured crisis," adding, "The fact is, we're not going to default on our debt. That's just completely false. We've got the money to do it."
Stephen Innes of SPI Asset Management stated further noted, "Beyond economics, the debt limit debate highlights the political polarisation that persists in the US and casts a cloud over the political process in Washington."
He went on to say that "the underlying issue was the worsening political polarisation, and it's hard to argue that the process has done anything other than continue to worsen since 2011."
Following the Wall Street sell-off, Asia was also under pressure on Wednesday.