The U.S. Senate on Tuesday narrowly passed the One Big Beautiful Bill Act, President Trump’s sweeping economic overhaul, with Vice President JD Vance casting the tie-breaking vote in a 51-50 decision. Three Republican senators Rand Paul, Thom Tillis, and Susan Collins joined Democrats in opposing the bill, citing concerns over its $3.3 trillion impact on the federal deficit.
The bill, which now returns to the House, represents a seismic shift in U.S. fiscal policy. Trump calls it the “largest tax cut in history,” highlighting provisions that eliminate taxes on tips, overtime, and Social Security benefits, while also funding immigration enforcement, infrastructure (“Golden Dome”), and implementing what he terms “generational welfare reform.”
Amid this fiscal shake-up, Fed Chair Jerome Powell is finding his influence increasingly undercut. Treasury Secretary Scott Bessent recently hinted that the administration may preemptively seat a “shadow Chair” in January by filling a 14-year Fed Board seat—possibly signaling Powell’s early sidelining before his May 2026 term ends.
Federal Reserve policy, the U.S. dollar, and inflation expectations are now entangled in Trump-era politics. While Fed governors Michelle Bowman and Christopher Waller suggest that rate cuts may come as early as July, Powell himself noted that the Fed would have eased already if not for the uncertainty surrounding Trump’s aggressive tariff regime.
Markets currently assign a 75% chance of a September rate cut, helping cap any near-term USD recovery. The dollar staged a minor bounce from a 3.5-year low but remains pressured amid weak ISM manufacturing data and tepid job creation.
Musk vs. Trump: A Political Fault Line in Tech
Tesla stock (NASDAQ: TSLA) fell 6% after President Trump told reporters he was considering deporting Elon Musk, a former ally, over Musk’s public criticism of Republican-led subsidy cuts. The feud intensified after Musk denounced the EV tax credit rollback, stating bluntly on X: “I am literally saying CUT IT ALL. Now.”
Trump, however, accused Musk of being the largest subsidy recipient “in human history,” and suggested the newly established Department of Government Efficiency (DOGE) may audit SpaceX and Tesla’s funding.
Oil Markets Waver Amid Ceasefire Hopes and OPEC+ Outlook
Crude oil prices held steady in Asian trading after Trump announced progress toward a U.S.-brokered Israel-Hamas ceasefire, building on a previous deal between Israel and Iran. Brent futures hovered around $67.09 per barrel, with WTI near $64.06.
Markets now anticipate a July 6 OPEC+ meeting, where the cartel is expected to formalize an August production hike of 411,000 barrels per day adding to previous monthly increases. The build-up reflects easing geopolitical tensions but also raises supply-side concerns, especially after API data showed a surprise 0.68 million barrel increase in U.S. inventories last week.
Trade, Tariffs, and Global Disruption
On the trade front, Trump’s July 9 deadline for retaliatory tariffs looms large. The president reiterated that Japan’s resistance to purchasing American-grown rice could provoke a 25% tariff on Japanese autos. U.S.-Japan negotiations, while ongoing, remain stuck amid rising political tension.
Meanwhile, Japan’s latest Tankan Survey showed stronger-than-expected business confidence and mounting inflation expectations—fueling speculation of a future rate hike by the Bank of Japan.