Futures markets are now open. And futures have already begun tumbling in response to the lack of a deal in Washington on the government shutdown and debt ceiling.
All eyes Sunday were on the Senate, where negotiations (of some sort) continued between Democratic and Republican leadership.
Five Democratic senators and one Independent — Heidi Heitkamp (D-N.D.), Mark Pryor (D-Ark.), Amy Klobuchar (D-Minn.), Angus King (I-Maine), Joe Donnelly (D-Ind.), and Joe Manchin (D-W.Va.) — released a statement shortly before 5 p.m. calling the discussions “productive.” They said the discussions were taking place among them, Sen. Susan Collins (R-Maine), and other Republicans.
“We have been involved in productive, bipartisan discussions with Senator Collins and other Republican senators, but we do not support the proposal in its current form,” the six senators said. “There are negotiations, but there is no agreement.”
In closing remarks on the Senate floor on Sunday, Senate Majority Leader Harry Reid (D-Nev.) also said he had a “productive” conversation with Minority Leader Mitch McConnell (R-Ky.) on Sunday. Reid said he’s “optimistic about the prospects for a positive conclusion.”
At issue seems to be the level of spending that the government will run at next year. Republicans want to lock in sequestration-level spending for as long as possible. Democrats would like to revisit spending levels as soon as possible to undo the spending caps that were put in place as part of the 2011 debt-ceiling deal.
The two sides aren’t that far apart, as the GOP realises that it has a weak hand and can’t ask for much. But Democrats aren’t inclined to give much, given their strong polling and desire to not give into GOP “hostage-taking.”
Given the politics, it’s unclear what can get through both Houses. Remember, even if a deal is agreed to by the Senate, the GOP-controlled House could kill anything.
The mood is more grim than it was on Friday, when it looked like a bipartisan deal hatched by Maine Senator Susan Collins could make it out of the Senate. That optimism led to huge market rallies on Thursday and Friday of last week, and now it looks likely that equity markets will give some of that back, as negotiations have gone in reverse over the weekend.
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