The Treasury Department announced further steps to keep funding the government without going over the nation’s debt limit, amid a stalemate between Congress and the Obama administration on approving an increase in the ceiling.
Federal Reserve policy makers say they want to avoid a sudden increase in interest rates when the time comes to start unwinding record monetary easing. A shrinking federal budget deficit is likely to help them meet that goal.
The Standard & Poor’s 500 Index retreated from a record amid concern the Federal Reserve will scale back its stimulus efforts. Gold and silver advanced as Moody’s Investors Service warned the U.S. rating may be cut. The yen rebounded from the weakest level since 2008.
U.S. policy makers must address debt loads projected to rise later this decade to avoid a 2013 downgrade, even as the latest budget projections are “credit positive,” according to Moody’s Investors Service.
Treasuries declined after a measure of consumer confidence in May reached an almost six-year high and an index of leading economic indicators topped forecasts, as Federal Reserve officials debate the pace of asset purchases.
Stocks rose, sending the Standard & Poor’s 500 Index to another record, as weakness in manufacturing and a drop in wholesale inflation fueled bets the Federal Reserve will be in no rush to scale back stimulus. The euro slid as the region’s recession deepened.
The U.S. Treasury Department suspended sales of securities to local and state governments, the first of several steps it can take to keep funding the government without breaching the nation’s debt limit.