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Negotiations between the President and House Republicans have reportedly broken down.
In a close-door meeting, Speaker John Boehner said talks have hit an impasse.
"The president rejected our deal," one GOP lawmaker told CNN. Another House Republican called the situation "a complete meltdown" and a "train wreck."
A Senate bill to raise the debt ceiling through the end of the year and fund the government through March 31 was rejected, although discussions between Senate Majority Leader Harry Reid and Senate Republican Leader Mitch McConnell are ongoing.
Summing up the situation is Republican Adam Kinzinger: "It doesn't seem like the White House is serious at all about entering negotiations with us until they see what comes out of the Senate. If they get something out of the Senate that's weaker than our negotiated position, it obviously strengthens their position."
Optimism about a proposed deal lifted stocks Friday and any lack of progress over the weekend will likely weigh on the broad market in the coming week.
The NYT reports Pres. Obama has rejected a Republican proposal for a 6-week debt ceiling hike (in exchange for negotiations) on grounds it wouldn't reopen the government. The proposal had fueled hopes a breakthrough might be on the way.
House Majority Leader Eric Cantor: "We expect further conversations tonight."
Equity futures have dropped on the report. S&P 500 (SPY) futures -0.6%. Dow (DIA) futures -0.5%. Nasdaq-100 (QQQ) futures -0.5%.
Update: Statement from The White House: "After a discussion about potential paths forward, no specific determination was made."
Stock index futures are ahead by 1% on signs of movement in the budget/debt ceiling standoff, with House GOP leaders preparing to head to the White House today. A WSJ editorial by Rep. Paul Ryan yesterday laid out a framework for a temporary increase in the budget cap.
Europe's up about 1.5% and Asia was moderately higher overnight.
Locked in a tight range in the low-to mid 2.60s for the last couple of weeks, Treasury yields break out to the upside with the 10-year up 5 bps to 2.71%.
Markets have rebounded from sizable early losses with a rumored deal brewing between the Senate's Harry Reid and the House's John Boehner as good of an excuse as any to hit the buy button.
The Dow (DIA +0.4%) is up 60 and the Nasdaq 100 (QQQ -0.2%) has sliced into a loss of more than 1%.
The FOMC minutes suggest members felt the taper was still on the table as of three weeks ago, but plenty has transpired since, among them the government shutdown and the nomination of Janet Yellen as next Fed chief. The betting here says no taper until 2014 at the earliest.
The yield on 4-week T-bills soars to its highest level since Lehman after the just completed Treasury auction prices the paper at 0.355% vs. 0.295% in when-issued trading. The yield was roughly zero a month ago. As a reminder, the money-market funds that are natural buyers of these bills have to refrain if they believe there is a chance they won't get paid.
Stocks move to session lows, the DJIA (DIA -0.5%), Nasdaq 100 (QQQ -1.6%).
Stock index futures are off nearly 1% as no progress was made over the weekend towards a lifting of the debt cap. Treasury Secretary Jack Lew took to the Sunday morning talk shows to report his shrill warnings of disaster should the Treasury stop servicing its debt.
Europe is also off by about 1% and Asia was mostly lower overnight.
The 10-year Treasury yield is lower by two basis points to 2.63%.
Curious amid subdued volatility of late, but the CME hikes initial and maintenance margins on the E-Mini S&P 500 (SPY) futures contract by 8.5%. Margins on the Nasdaq 100 (QQQ) and DJIA (DIA) contracts are raised by similar amounts.
Stocks continues to mostly snooze through the government shutdown, with futures off about 0.2% - depending on what index is your favorite.
It's not the shutdown, said Goldman chief Lloyd Blankfein after a meeting at the White House yesterday, it's what could be the coming failure to raise the debt ceiling this month. The consequences of this, he warns, would be "extremely adverse."
Europe's is mixed and Asia was mostly higher overnight.
The 10-year Treasury yield is up two basis points at 2.64%.
Big bank bosses - among them Dimon, Blankfein, Moynihan, Gorman, and Stumpf - are set to meet with the President at noon today to discuss the government shutdown, and maybe more importantly the looming debt ceiling. Also included in the meeting will be AIG chief Bob Benmosche.
In other news, Obama has invited congressional leaders from both sides of the aisle to come to the White House later today.
The latter tidbit was good for a 40 point move in the Dow, though it remains lower by 0.6%.