Talks between President Joe Biden and Republican House Speaker Kevin McCarthy ended without a deal yesterday, but the negotiations were “productive”, the latter has said.
While talks recently stalled when Biden briefly attended the G7 summit in Japan, the pace may be picking up. “We know the deadline. I think the president and I are going to talk every day . . . until we get this done.” McCarthy told reporters. In separate remarks, Biden also used positive language: “We reiterated once again that default is off the table and the only way to move forward is in good faith towards a bipartisan agreement.”
On the same day, Treasury secretary Janet Yellen again warned that the US would start running out of money to pay its bills in early June, potentially by June 1. Oxford Economics estimated the Treasury would be able to “squeak by” until June 14.
Both Democrats and Republicans have accused each other of blocking progress on talks. Biden has urged Republicans to ditch their “extreme” stance, which includes deep spending cuts over the next decade compared with Democrats backing smaller cuts over a shorter period.
The uncertainty on whether a deal would materialise has started to be felt in the corporate bond markets, as US companies bring forward billions of dollars in deals to sidestep any turmoil caused by a default. Richard Zogheb, head of global debt capital markets at Citi, said the move reflected “a combination of ‘let’s avoid the nonsense of the debt ceiling and let’s take advantage of what’s a pretty good market’”.
Here’s what else I’m watching today:
Results: Lowe’s is forecast to report that its revenue declined 8.7 per cent to $21.6bn, as consumers rein in spending on home improvement projects. Sports retailer Dicks Sporting Goods and luxury homeware company Williams-Sonoma will report before the opening bell. Software group Intuit will report after the bell.
US new home sales: Economists have forecast that sales of new homes in the US declined in April to an annualised pace of 665,000 units, down from 683,000 in March.
International Booker: The winner of the book prize is announced in London.
Who will win the US-China tech war? Join FT and Nikkei Asia journalists for a subscriber-exclusive webinar this Thursday and put your questions to the panel.
Five more top stories
1. Exclusive: New climate-friendly biofuels will “never achieve the price of jet fuel”, Boeing’s chief Dave Calhoun has warned, pouring cold water on a central pillar of the aviation sector’s strategy to slash emissions. Sustainable fuels account for less than 1 per cent of global aviation consumption and cost twice as much as traditional jet fuel.
2. JPMorgan Chase, the largest bank in the US, is planning a massive spending spree of $15bn this year, $2bn more than it spent last year. The bank has raised its 2023 forecast for net interest income following its acquisition of First Republic.
3. Florida governor Ron DeSantis is expected this week to file paperwork for the 2024 presidential race. But DeSantis’s popularity is floundering compared with Donald Trump, who at present has the support of more than 56 per cent of Republican voters, according to an opinion poll.
Another Republican hopeful: Tim Scott, a South Carolina senator, has joined the race for the presidency, adding another name to an increasingly crowded field of Republicans vying for the party nomination.
4. Exclusive: TikTok has restructured its ecommerce business to refocus on certain markets. Staff in Brazil who were working on launching TikTok Shop there are being relocated to markets where the service has already been introduced. Read more on the ByteDance-owned platform’s plans.
5. China is worried that new Japanese export controls could cripple the country’s chipmaking industry. The new rules could be more restrictive than even the US’s and would make it difficult for China to produce the most basic chips found in household goods.
The Big Read
US Congress members who buy or sell a stock are required to report the transaction within 45 days. But these individual transaction reports leave out the vast majority of lawmakers’ investment portfolios because purchases of collective investment funds only need to be revealed once a year in complex and harder-to-access reports. Here’s how Capitol Hill is struggling to keep up with new insider trading risks.
We’re also reading . . .
Chart of the day
After a rough year, “bonds are exciting again”, with yields on Treasury notes at one of their highest points in the past decade. Mike Gitlin, chief executive of Capital Group, which manages $2.2tn in assets, said the company was seeing an average of $500mn in net new flows entering the market every week, and that $1tn could enter the bond market over the next few years.
Take a break from the news
Salman Rushdie was last year repeatedly stabbed onstage at a literary festival in upstate New York, which resulted in him losing his sight in one eye. In one of his first public appearances since then, the 75-year-old novelist told the FT Weekend Festival on Saturday that he was planning to write a book about the attempt on his life.
Additional contributions by Amanda Chu and Tee Zhuo
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