US Senate Majority Leader Harry Reid has said there has been "tremendous progress" towards the debt limit and a government funding deal.
Senate Republican Leader Mitch McConnell echoed this progress, but Reid made it clear they "are not there yet".
Hopes for heading off a default and ending a US federal government shutdown grew today after encouraging comments from the congressional leaders at the centre of the discussions.
The stock market turned positive on the optimistic predictions of Senate Majority Leader Harry Reid for the Democrats and Senate Republican leader Mitch McConnell for the Republicans.
President Barack Obama postponed a meeting with the congressional leaders planned for today to allow their discussions to continue uninterrupted.
As we enter the third week of this budget crisis, there are some pretty encouraging signs that a deal may be struck that would both reopen the government and raise the debt ceiling - but what a tortuous process this has been.
Congressional leaders were expected to meet the President just a couple of hours ago and that meeting has been postponed indefinitely.
Even if a deal is struck, we're only talking about a temporary deal here, about the government being open for another three month and for the debt ceiling to be raised for another four months while more longer-term negotiations go on.
We're talking a ceasefire here not a peace treaty.
As US politicians race to raise the country's debt ceiling before Thursday's deadline, here is a glossary of some key terms of the debt crisis:
- Debt ceiling: The limit on the amount that the US government can borrow. This is set by Congress and is currently $16.7 trillion
- Congress: The US legislative body responsible for setting the debt ceiling. It consists of two parts - the Senate and House of Representatives
- Default: This is when a borrower cannot repay a debt on time. In the case of a country, like the US, this is called "sovereign default"
- Bond: Bonds are an IOU issued by government in order to raise money. They are usually - and especially in the case of US Treasury bonds - seen as a safe investment
- Yield: The amount of return (or interest) that the government pays to a bondholder. This is tied to the value of the bond, which is linked to the likelihood of the issuing country repaying
US President Barack Obama's meeting with congressional leaders set for later today has been postponed, the White House said.
A White House spokesperson said the meeting has been postponed to allow Senate leaders to "continue making important progress" towards a solution on the debt ceiling and reopening the government.
US President Barack Obama and Vice President Joe Biden will hold talks with congressional leaders later today in a bid to avert a looming default as Thursday's deadline draws closer.
President Obama said during a visit: "My hope is that a spirit of cooperation will move us forward in the next few hours."
The Treasury Department says it cannot guarantee that the US government will be able to pay its bills past Thursday if Congress does not raise the $16.7 trillion debt ceiling by then.