Habemus Bill

As expected, the speaker of the House pressured enough congressmen to get the necessary votes to deliver the Big Beautiful Bill to the resolute desk by Independence Day. To put the cherry on top, the U.S. unemployment for the month of June went down to 4.1%, and revenue through tariffs is coming in at a $300Bn annualized pace. Trump’s White House is ecstatic. If only interest rates were lower…and that’s perhaps the only thing that it’s not going the presidents way at this point (according to him, of course). The problem is, if taxes are down, and unemployment is lower, why would the FED need to lower rates at this juncture? Their data dependent approach seems to indicate that inflation risks remain to the upside, so it’s prudent to wait and see. But Trump’s approach is “All-in-NOW” and wants to inject adrenaline directly into the economy’s heart a la Pulp fiction. For the first time in recent history, we have a president that aims to deliver on every promise he made during the campaign, and we’re not used to it, neither are we ready for its consequences. As the U.S. celebrates its independence today, we will need to wait till Monday to see the bond market reaction to the Bill and Unemployment.

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