WASHINGTON (CBSDC/AP) – No deal was struck after House Republicans met with President Obama proposing to raise the debt limit for six weeks.

“After a discussion about potential paths forward, no specific determination was made,” the White House said in a statement.  “The President looks forward to making continued progress with members on both sides of the aisle.”

According to CBS News, a spokesman for House Speaker John Boehner released a statement saying that communication would continue throughout the night.

“House Republicans remain committed to good faith negotiations with the president, and we are pleased there was an opportunity to sit down and begin a constructive dialogue tonight,” Boehner’s statement said.

Obama met with House Republicans for 90 minutes at the White House.

“The President’s goal remains to ensure we pay the bills we’ve incurred, reopen the government and get back to the business of growing the economy, creating jobs and strengthening the middles class,” the White House also explained in the statement.

CBS News reported that House Majority Leader Eric Cantor told reporters the talks between Obama and House Republicans had been productive.

“We had a very useful meeting. It was clarifying, I think, to both sides as to where we are. And the takeaway from the meeting was, our teams are going to be talking further tonight.  We’ll have more discussion. We will come back to have more discussion,” Cantor stated. “The President said that he would go and consult with the administration folks, and hopefully we can see a way forward after that.”

The Obama administration says the debt ceiling needs to be increased by Oct. 17 in order to avoid a first-ever default by the U.S.

Testifying before the Senate Finance Committee Thursday morning, Treasury Secretary Jack Lew said that not raising the debt ceiling could lead to “irrevocable damage” to the nation’s economy.

“The United States should not be put in a position of making such perilous choices for our economy and our citizens,” Lew said. “There is no way of knowing the irrevocable damage such an approach would have on our economy and financial markets.”

Markets have already experienced a backlash over concern about a U.S. default.

Fidelity Investments, the nation’s largest money market mutual fund manager, has sold all of its short-term U.S. government debt.

Money market portfolio managers at Fidelity Investments started selling off short-term U.S. government debt a couple of weeks ago, Nancy Prior, president of Fidelity’s Money Market Group, said Wednesday. While Fidelity expects the debt ceiling issue to be resolved, the Boston-based asset manager said it has taken steps to protect investors.

“We expect Congress will take the steps necessary to avoid default, but in our position as money market managers we have to take precautionary measures,” Prior said.

Fidelity, which manages $430 billion in money market mutual funds, has taken similar actions in the past. The most recent instance was in the summer of 2011, when the U.S. government came close to a default and Standard & Poor’s downgraded the nation’s credit rating, Prior said.

Prior said that Fidelity no longer holds any U.S. debt that comes due in late October or early November, the window considered by many investors to be the most exposed if the government runs out of money to pay its debts.

Money market funds are a significant part of the U.S. financial system. Individuals and institutional investors have roughly $2.685 trillion invested in the funds, according to data from the Investment Company Institute.

Money market funds are typically ultra-safe places to park money. They invest primarily in short-term debt that can be easily bought and sold, such as U.S. Treasurys or commercial paper, debt issued by large companies to fund their day-to-day expenses. In a money market fund, investors expect to get back every dollar they invest.

The U.S. Treasury has warned it will run out of money if Congress does not agree to raise a $16.7 trillion cap on borrowing by Oct. 17 and allow it to issue more debt.

The worry has other parts of the market showing signs of stress. Like Fidelity, other investors have tried to limit their exposure to U.S. government debt that comes due this month, with the heaviest selling occurring in one-month Treasury bills. The yield on the one-month T-bill jumped to 0.27 percent Wednesday, its highest level since the 2008 financial crisis. The yield was nearly zero at the beginning of the month.

Money market mutual fund managers don’t want to be caught holding U.S. government debt that comes due around the time the government hits the debt ceiling. They fear that the government may not be able to pay back bond holders, said Gabriel Mann at the Royal Bank of Scotland Group.

“Investors are buying protection,” Mann said, referring to growing demand for insurance against the U.S. defaulting on its debt — a security known on Wall Street as a credit default swap.

Overnight interest rates in the repo market, used by banks to fund day-to-day lending, shot up to 0.12 percent Wednesday from 0.04 percent at the beginning of the month.

The increase is partly because some banks have stopped accepting some U.S. Treasury’s as collateral, or are requiring more collateral, to borrow.

Not all investors are worried though.

“We’re doing just the opposite … probably buying what Fidelity is selling,” Bill Gross, co-founder of PIMCO, the world’s largest bond fund manager, said Wednesday in an interview with CNBC.

Gross said the odds of the U.S. defaulting on its debt are a million to one.

(TM and Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)


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