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Why stocks seem to be signaling a debt deal ...

Offer Boehner a way out: Chanos

Wall Street thinks President Barack Obama and Republican leaders will reach a deal to increase the debt ceiling before next week's deadline, closely watched short-seller Jim Chanos told CNBC on Thursday.

"All of Wall Street thinks they're going to reach a deal because if not we'd be lower than we are," Chanos said in a "Squawk Box" interview. "We're not trading our positions on the sequester, government shutdown, or God forbid the debt ceiling." He added, "Remember, we're hedged all the time, so it's not a market call."

(Read more: Still short HP-it remains 'under assault': Chanos)

President Obama invited all House Republicans to the White House Thursday, but the GOP is only sending an 18-member delegation. Obama is also expected to meet with Senate Democrats Thursday.

(Read more: Shutdown: House GOP to meet with Obama)

Both sides are stepping up efforts to find common ground in hopes of ending the government shutdown—now in Day 10.

They'll also be looking to reach an agreement on raising the debt ceiling before next week's deadline set by Treasury Secretary Jack Lew, who testified before the Senate Finance Committee Thursday morning.

(Read more: Cherry-picking US debts irresponsible: Lew)

—By CNBC's Matthew J. Belvedere. Follow him on Twitter @Matt_SquawkCNBC. CNBC's hedge fund specialist Maneet Ahuja contributed to this report. Follow her on Twitter @WallStManeet.