The financial markets paid little attention to remarks by President Obama on the debt ceiling debate this morning. Stocks and bonds basically treaded water even after a bombshell report from the U.S. Commerce Department that first quarter GDP was revised downward to a paltry 0.4% and that Q2 growth clocked in at 1.3% — down from an estimated 1.9%.
President Obama, in an address to the nation this morning from the Palm Room at the White House, said that the only way a debt deal would get done is through bipartisan means. He also said that a Republican-led House of Representatives bill sponsored by House Speaker John Boehner (R-Oh.) had no chance of passing.
“Today I urge Democrats and Republicans in the Senate to find common ground that can get support by both parties in the House,” Obama said. “Any solution to avoid default must be bipartisan.”
The President noted that the clock is ticking, and that the U.S. is “almost out of time.” He also took a jab at Congress, noting that the country could lose its “AAA credit rating … because we didn’t have a AAA political system to match.”
The President’s remarks come only four days before the August 2 debt ceiling deadline, and investors has been on pins and needles over the possibility of a deal not going down. That could mean the federal government would default on its debt obligations or suffer a debt downgrade from global credit agencies.
At 11:30 a.m., about one hour after the President’s remarks, the Dow Jones Industrial Average was down by 6.43, or 0.05%. The NASDAQ index was up 12.73, or 0.46%, while the 10-year U.S. Treasury Note was down, but barely, at 0.099% and safely under the 3% yield level, at 2.85%.
Traders seemed relatively upbeat after rumors of a presumed debt deal was already in place. CNBC was reporting that a debt deal had been “hammered out” and that both parties were “prepared to accept a short-term extension” to get a deal done. But no media outlets corroborated that report.
One note of caution: The Chicago Board of Trade Volatility Index (VIX), which strives to track investor anxiety, pushed higher to levels not seen since March 2011.