Roadblocks

Trump tax bill does not look so beautiful for conservative representatives in the House, as 5 of them switched to Nay and block its approval yesterday. It sure will be voted again and pressure wil be applied to these congressmen to align with the agenda, but the bill has encounter another roadblock. In addition to that, the ADP private payroll report, came in negative (please see chart below), far from expectations, showing a continuation of a deteriorating trend on the labor market. With that, Trump is asking for Powell to resign, as he sees him as the root of the problem. The odds of a rate cut in July move up, but only to 26%,not enough to move the needle. The U.S. unemployment rate for the month of June will be published today. On the trade negotiation front, the U.S. continues to put pressure on China, as they reached a deal with Vietnam that will impose 20% tariffs on their products and 40% on transshipping, which is the fancy word for products exported to the U.S. from China through Vietnam. How are they goin to control that? We’ll see. In this context, the equity indices are printing new highs and treasury bonds yields are lower, providing mixed signals, as the equity market seems to be ok with current developments, and the bond market likely signaling the economy is slowing down. Long weekend ahead with the OBBB at center stage.

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