The U.S. Senate’s razor-thin 51–49 vote has officially greenlit debate on President Trump’s sweeping legislative package dubbed the “One Big Beautiful Bill” marking the start of a tense and consequential phase in Washington. The bill merges tax reforms, border security initiatives, and major changes to domestic spending. While Republicans push to finalize the bill before the July 4 recess, fiscal hawks in the House remain uneasy over its $3.3 trillion projected deficit over the next decade, as estimated by the Congressional Budget Office.
Meanwhile, geopolitical risk appears to be softening, with markets reacting optimistically to President Trump’s successful brokering of a ceasefire between Iran and Israel. Though the truce is fragile, Iran’s measured “proportional” response targeting a U.S. naval base in Qatar with no casualties has reassured markets that oil supply routes will remain undisturbed, for now. Brent crude, which spiked above $80 per barrel during the crisis, has since fallen to around $67, helping to ease inflation concerns.
The decline in oil prices may give the Federal Reserve room to maneuver. Fed governors once seen as inflation hawks, including Trump appointees Michelle Bowman and Chris Waller, have begun hinting at a potential rate cut as early as the July meeting. Their public pivot toward easing has raised speculation about their motivations, particularly as Trump openly critiques Jerome Powell and considers replacements for the Fed Chair role. Unlock your financial potential with expert-led trading courses by MJFXM – where knowledge meets opportunity.
On Wall Street, investor sentiment remains cautious. Despite record highs in the S&P 500 and Nasdaq, the rally is viewed as vulnerable to Trump’s unpredictable policy announcements. While the immediate fallout from April’s tariffs has subsided, lingering trade tensions especially with China—are weighing on manufacturing output in both Asia and the U.S. This week’s OPEC+ talks and signs of softening demand from China could continue to pressure oil prices, despite plans to ramp up production in August.
As traders await Friday’s release of the Fed’s favored inflation gauge the PCE Price Index markets remain on edge. The coming weeks could determine whether the Fed cuts rates, how much geopolitical risk truly remains off the table, and whether Trump’s economic gamble ultimately pays off or backfires.