Detailed talks on raising the U.S. government's $31.4 trillion debt ceiling kicked off on Wednesday with Republicans continuing to insist on spending cuts, the day after Democratic President Joe Biden and top congressional Republican Kevin McCarthy's first meeting in three months.

Time is tight to avoid a historic, economically destabilizing default on government debt, which the Treasury Department has warned could come as soon as June 1. But some areas of potential compromise emerged after a White House meeting on Tuesday.

The standoff has rattled investors, sending the cost of insuring exposure to U.S. government debt to record highs, as Wall Street grows more concerned about the risks of an unprecedented default.