McCarthy Optimistic About Debt Limit As U.S. Is Put On Credit Watch

House Speaker Kevin McCarthy’s optimism that White House and Republican negotiators would reach a deal in time to avert a potentially catastrophic default didn’t mollify analysts as the US was put on a sovereign ratings watch, Erik Wasson, Billy House and Ari Natter reported for Bloomberg News.

Photo Insert: The California lawmaker said Wednesday after a four-hour meeting between his and President Joe Biden’s hand-picked negotiators that a deal was possible before June.

The California lawmaker said Wednesday after a four-hour meeting between his and President Joe Biden’s hand-picked negotiators that a deal was possible before June — the date by which Treasury Secretary Janet Yellen has warned the US could run out of money to pay its bills.

“I still think we have time to get an agreement and get it done,” McCarthy said after the meeting concluded. Hours later, Fitch Ratings placed the AAA credit rating for the US on watch, a sign of growing unease about the country’s ability to avert a first-ever default.

The US received a credit downgrade during similar turmoil in 2011.

Fitch still expects a resolution to the debt limit before the June 1 so-called “X-date.” Another firm, DBRS Morningstar, took similar action Thursday, putting the AAA grade for the US “under review with negative implications,” while still anticipating Congress to act in time.

US stock futures climbed Thursday morning, aided by positive earnings news, but other areas of markets signaled worry. A key money-market rate jumped, as lenders of cash appeared more skittish about making overnight loans backed by Treasury securities.

A White House spokesperson said late Wednesday the Fitch report demonstrated the urgency of reaching a speedy resolution to the debt ceiling standoff.

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