Crypto Enters Home Loans as Housing Finance Agency Directs Fannie and Freddie to Treat Reserves as Assets

Cryptocurrency

Political

Summary:

The two government-sponsored enterprises must draft plans that show how they will recognize borrower crypto holdings without first converting the coins to dollars.

US Federal Housing Finance Agency (FHFA) Director Willian J. Pulte ordered on June 25 that Fannie Mae and Freddie Mac treat cryptocurrency reserves as eligible assets when they measure risk on single-family mortgage loans, effective immediately.

The two government-sponsored enterprises must draft plans that show how they will recognize borrower crypto holdings without first converting the coins to dollars.

Strict collateral rules and board oversight

Pulte’s signed directive instructs each enterprise to limit recognition to cryptocurrency that sits in wallets controlled by US-regulated centralized exchanges.

The order also requires the enterprises to add risk mitigants that account for market volatility and to keep reserve ratios that reflect the share of collateral held in digital assets.

Additionally, each enterprise must secure board approval before it submits the completed proposal to the FHFA conservator for review. The order is effective immediately.

Fannie Mae and Freddie Mac purchase and securitize the majority of conforming US residential mortgages. Their risk models determine the amount of capital they must hold against potential credit losses.

By allowing crypto reserves to enter those models, Pulte aims to widen the asset information available for underwriting and “facilitate sustainable homeownership to credit-worthy borrowers,” according to the text of the directive.

Risk-adjusted frameworks

The directive instructs each enterprise to develop an assessment that integrates crypto reserves into its existing loan risk framework. That assessment must describe how the enterprise will value cryptocurrency, apply haircuts, and adjust for daily price swings.

The directive also requires an analysis of how crypto reserves interact with other borrower assets and liabilities. After board approval, each enterprise must send the proposal to FHFA for sign-off before implementation.

By invoking the authority to issue binding instructions that alter underwriting or capital standards, Pulte accelerated a process that otherwise would have needed rulemaking or legislative action.

The order does not change conforming loan limits or documentation requirements but expands the categories of qualifying reserves.

Broader national crypto policy

Pulte announced the action on his social media account the same day, writing that he acted “in keeping with President Donald Trump’s vision to make the US the crypto capital of the world.”

He added: “Today is a historic day in the cryptocurrency industry.”

The directive follows months of internal study, according to Pulte’s remarks. The order does not specify which coins qualify. Still, the reference to US-regulated exchanges limits the pool to tokens listed on venues that follow federal know-your-customer and anti-money laundering rules.

Both enterprises must begin work on the proposals “as soon as reasonably practical,” the directive states. Pulte committed the agency to review each plan once the boards submit them but did not set a public deadline for submission.

The order remains in force unless FHFA rescinds or modifies it.

Source: Cryptoslate

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Manuel

Economic

Political

The White House is making its closing argument for President Trump’s "One Big Beautiful Bill Act,” and it involves some eye-popping projections for the US economy that don’t line up with predictions of independent economists.

How eye-popping? Try economic growth of 4.9% in the short term and up to $11.1 trillion in deficit reduction over the next decade if the Senate bill is passed and Trump’s agenda is enacted.

"Those are very big numbers," acknowledged Council of Economic Advisers Chair Stephen Miran on a call with reporters as he laid out a 27-page report.

The findings were immediately met with skepticism by economists who have come to very different conclusions.

The report nevertheless concludes that Trump’s entire “suite” of policies — from the bill itself to unilateral deregulation efforts to tariffs — could lead in Miran's words to “very material increases in GDP growth, very material increases in investment activity, and very material increases in real wages and take-home pay.”

The case is essentially that certain provisions in the bill — especially deductions for businesses around things like research and development — will lead to a spike in corporate investment that will then fuel 4.6% to 4.9% in additional GDP growth over the next four years.

It's an aggressive projection to say the least. For context, a recent Tax Foundation estimate pegged that figure at 1.1%.

But that outsized 4%+ growth will then fuel, the White House says, a reduction in federal deficits by roughly $8.5-$11.1 trillion over the standard 10-year budget window. That would lead to thousands of dollars in additional income for a typical family and stabilize America’s debt-to-GDP ratio, according to the report.

The rosy predictions from the White House were immediately slammed by a range of economists.

“Well I guess if you are going to make stuff up, go big or go home,” offered former Democratic Congresswoman Carolyn Bourdeaux.

“No credible economist believes this bill is going to reduce the deficit,” she added, noting that “it adds $3+ trillion.” Bourdeaux currently runs the Concord Coalition, a group focused on the national debt.

A range of independent projections — from the Congressional Budget Office to the Tax Foundation to the Penn-Wharton Budget Model — have looked at different versions of the bill and reached a similar conclusion of much lower economic growth and a price tag in the neighborhood of $3 trillion over the next decade.

The back and forth comes after the House passed a first version of the bill last month that was then followed by amendments in the Senate. Majority Leader John Thune hopes to finalize those amendments and put the entire package up for a series of votes starting Friday.

The deliberations are also being closely watched by Wall Street with the mega-bill also responsible for raising a debt ceiling that is ticking towards a government default as early as Aug. 15, the Bipartisan Policy Center projected in a new report also released Wednesday.

A frantic final series of negotiations and cost projections

The problem for Thune and other Republicans is that a series of fights over different pieces of the bill remain unresolved, with GOP leaders facing a daunting to-do list in the days ahead before another round of voting can begin.

In addition to lawmaker objections over issues like state and local tax (SALT) deductions and Medicaid cuts, recent Senate changes already appear likely to increase the price tag further and have further inflamed the concerns of fiscal hawks. The White House Makes its Closing Argument for Trump´s Big Beautiful Bill: ´Very big' Economic Benefits_1

The White House Makes its Closing Argument for Trump´s Big Beautiful Bill: ´Very big' Economic Benefits_1

A look at the tax provisions of the bill in recent days from the Joint Committee on Taxation offered a new price tag that tops $4 trillion.

Wednesday’s White House report offered a breakdown of how officials say the top figure of $11.1 trillion is achievable, suggesting that roughly $2.1-2.2 trillion in deficit declines come from the bill itself.

Other cost savings will come from additional reductions in discretionary spending (about $1.8 trillion) and more tariff revenue (another $3.2 trillion).

The tariff revenue figure is an increase from a recent Congressional Budget Office calculation of $2.8 trillion in revenues, but only if tariffs stay at current levels for the next decade.

The final piece of the report focused on deregulatory and energy policies. The White House concluded those steps could reduce the deficit somewhere between an additional $1.3 and $3.7 trillion over the coming decade.

The new numbers further reinforced a divide between between economists and the White House.

After the House bill was released, there was an $11 trillion chasm between what economists said the bill’s effects would be and what the White House said Trump’s agenda will bring.

The divide is now now even wider, with $15 trillion separating projections released in recent days from each side.

The bill is "far from deficit neutral" added Heather Boushey, a former member of Joe Biden's Council of Economic Advisors on Wednesday afternoon. "There are a lot of shenanigans in how they are calculating their numbers."

Source: Yahoo Finance

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Adam

Economic

President Donald Trump’s policies will reduce US fiscal deficits by up to $11 trillion over the coming decade, according to the White House’s chief economist — a projection that defies analysts who say government debt is poised to climb to record highs in coming years.

“We calculate that, overall, the reduction in deficits as a result of the total suite of the president’s policies is going to be roughly $8.5 to $11 trillion over the 10-year budget window,” Stephen Miran, chair of the Council of Economic Advisers, told reporters on a call Wednesday. “Those are very big numbers.”

About half the savings, or $3 trillion to $5 trillion, would come from faster economic growth — thanks to the pending Republican tax cut bill, along with deregulation efforts — Miran argued. He also cited a $3 trillion bump in revenues from Trump’s tariff hikes, referring reporters to the Congressional Budget Office’s recent calculation — which came in at $2.8 trillion. Reduced debt loads thanks in part to those savings will help to bring down the US Treasury’s interest costs by approximately $1 trillion to $1.5 trillion, he said.

Miran was speaking on a call touting the benefits of the GOP’s “One Big Beautiful Bill” of tax and spending cuts that Trump has called on his party to pass in Congress by July 4. The House passed one draft last month, and the Senate is now aiming to approve its version this week.

The House-passed version of the package was most recently estimated by the CBO to boost the deficit, not cut it, by some $2.8 trillion. The CBO analysis on tariffs also assumed that the tariff rates in effect as of mid-May would be in place for a decade — even though trade talks are under way that may reduce those levies, and Trump won’t be in office throughout that period.

Trade Agreements

A preliminary analysis from the Tax Foundation found the Senate bill would cost $3.9 trillion over a decade, after accounting for economic impacts.

Miran also said that he’s optimistic there will be a flurry of framework agreements with US trading partners getting announced by July 9, the expiration date for Trump’s pause on reciprocal tariffs. Agreements will depend on the willingness of other countries to engage, Miran said, adding that he expects there to be “some stubborn holdouts.” Any agreements notwithstanding, Miran said there’s no downside risk to the CBO’s $2.8 trillion estimate for increased revenue from tariffs.

The CEA offered a breakdown of its analysis showing the impact of Trump’s policies, which included the following estimates:

Faster growth thanks to the tax cuts will shrink fiscal deficits by $2.1 trillion to $2.3 trillion over a decade.Stronger growth due to deregulation and Trump’s energy policies will narrow the deficit by another $1.3 trillion to $3.7 trillion.The US debt-to-gross domestic product ratio will fall to 94% by 2034, instead of rising to 117% if Trump’s 2017 tax cuts were allowed to expire at year-end.

Analysis by the non-partisan CBO in January that incorporated an expectation for the expiration of the 2017 tax reductions showed the US on course for a 107% debt-to-GDP ratio by 2029 — exceeding the all-time high reached in 1946, just after the end of World War II.

For his part, Treasury Secretary Scott Bessent earlier this month said there’s “varying scoring” of the tax bill, telling lawmakers, “It is my view that over the 10-year window, it will decrease.”

Federal budget deficits have exceeded 6% of GDP the past two years, despite strong economic growth and job gains. Bessent said this month that the 2025 gap would come in between 6.5% and 6.7%.

When it downgraded the US sovereign rating last month, Moody’s Ratings said it expected deficits to widen, reaching nearly 9% of GDP by 2035, “driven mainly by increased interest payments on debt, rising entitlement spending, and relatively low revenue generation.”

source :Bloomberg

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Manuel

Central Bank

Political

The Federal Reserve unveiled a proposal on Wednesday that would overhaul how much capital large global banks must hold against relatively low-risk assets, as part of a bid to boost participation in U.S. Treasury markets.

The proposal unveiled by the Fed would reform the so-called "enhanced supplementary leverage ratio" so that the amount of capital banks must set aside is directly tied to how large a role each firm plays in the global financial system. The Fed board will consider and vote on the proposal later Wednesday.

The proposal, if completed, could result in a sizeable reduction in capital for the nation's biggest banks. Depository institution subsidiaries at those banks would see capital requirements fall by an average of 27%, or $213 billion. Global bank holding companies would see a 1.4% capital reduction, or $13 billion.

The move is the first in what is expected to be a sweeping effort by the Fed and other bank regulators to step back several rules established following the 2008 financial crisis, as the Trump administration prioritizes deregulation in a bid to boost economic growth.

Fed policymakers touted the changes as a necessary fix, as the requirement imposed as a backstop following the 2008 financial crisis had gradually grown over the years to occasionally constrain bank activities, particularly thanks to the rapid rise in government debt in recent years. Given the leverage requirements direct banks to set aside capital regardless of risk, some Fed officials worried the requirement disincentivized large banks from facilitating Treasury market trading, particularly during times of stress.

"The proposal will help to build resilience in U.S. Treasury markets, reducing the likelihood of market dysfunction and the need for the Federal Reserve to intervene in a future stress event," said Fed Vice Chair for Supervision Michelle Bowman, in prepared remarks.

Bowman added that the sizeable reductions at the bank level would not allow banks to pay out more to shareholders, as the overarching holding companies at each firm would remain constrained by additional capital requirements. Instead, firms would be able to reallocate capital within their organizations more efficiently, she said.

Fed Chairman Jerome Powell said in a prepared statement it was "prudent" to reconsider the rule, given the increase in safe assets on bank balance sheets over the last decade.

Under the current rule, banks must set aside a flat percentage of capital in reserve against all assets. Under the new approach, similar to one proposed but not completed in 2018, banks instead would have to hold capital that is equal to half of their "GSIB surcharge," which is an additional capital requirement imposed on the nation's largest banks, and set based on their overall footprint in the financial system.

While the proposal is expected to advance, two Fed governors indicated they plan to oppose the proposed changes at the Wednesday meeting. Fed Governors Adriana Kugler and Michael Barr said in separate prepared statements they will vote against the proposal, citing the sizeable decrease in capital requirements and skepticism the changes would meaningfully improve bank activities in Treasury markets.

Barr previously served in Bowman's role as the Fed's top regulatory official under President Joe Biden.

Source: Reuters

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Owen Li

Central Bank

Donald Trump has begun interviews to choose a successor for Federal Reserve Chair Jerome Powell. This move highlights potential shifts in monetary policy and financial markets.

Promises of tariff revenue and changes in leadership could reshape financial markets, potentially impacting monetary policies and global assets.

Kevin Warsh, Kevin Hassett, Christopher Waller, and Scott Bessent are considered for Powell's role. Trump criticized Powell's leadership, highlighting potential policy shifts. In a statement, Trump remarked, "I know within three or four people who I’ll pick. I mean, he goes down pretty soon, fortunately, because I think he’s terrible..."

Market dynamics could shift globally, with key cryptocurrencies like BTC and ETH responding to rate policy changes. Trump's criticisms point to potential interest rate policy updates.

Jerome Powell emphasized stability, suggesting no immediate changes in monetary policy. Future administration choices could influence financial and crypto markets.

Primary emphasis on new leadership could reshape U.S. financial policies. Historic transitions offer insights into potential market volatility for digital assets. Crypto market adjustments could reflect leadership and policy shifts.

Source: CryptoSlate

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Adam

Economic

President Trump told reporters that he is actively considering replacements for Federal Reserve Chairman Jerome Powell, and that he is down to three or four candidates.

"I know within 3 or 4 people who I’m going to pick," he said Wednesday, without offering specific names.

The consideration of Powell successors comes after a period of intensifying pressure from Trump to consider rate cuts as the chairman’s guarded wait-and-see monetary policy stance continues to inflame tensions with the White House.

Trump’s comments on Wednesday didn’t address the question of whether he is looking to fire Powell or announce his final pick quickly in part to undercut Powell’s authority for the remainder of his term.

But it comes after the president offered last week: "Maybe, just maybe, I'll have to change my mind about firing him?"

Powell has said he intends to serve out his term as chair, which ends in May 2026.

"He goes out pretty soon fortunately because I think he's terrible," Trump added Wednesday.

The comments from the president during a press conference in the Netherlands came at the same time as Powell sat before Senate lawmakers about 3,800 miles away in Washington for his second day of regularly scheduled testimony before Congress.

Powell told Senate lawmakers that the central bank is "well-positioned to wait" on any interest rate adjustments until it has more clarity on how Trump's tariffs will affect inflation and the direction of the US economy. He delivered the same message to House lawmakers Tuesday.

The president's attacks on Powell intensified at the end of last week as Trump called for rates to drop from 4.25% to 4.5% to between 1% and 2% and said of Powell and the Fed's board of governors: "I don't know why the Board doesn’t override this Total and Complete Moron!"

Trump repeated some of those points in a Tuesday social media post, calling for rates "at least two to three points lower" and saying that Powell "will be in Congress today in order to explain, among other things, why he is refusing to lower the Rate."

"I hope Congress really works this very dumb, hardheaded person, over. We will be paying for his incompetence for many years to come."

On Wednesday Trump reiterated his oft-stated case of why Powell should lower rates by at least one percentage point immediately, citing "no inflation."

He also recounted an earlier face-to-face meeting with Powell, offering a mocking voice for Powell, and repeated his personal attacks by saying "I think he's a very stupid person actually" and "an average mentally person."

Trump is not the only one calling for lower rates. Even some of Powell's fellow policymakers — Fed governors Michelle Bowman and Chris Waller — have said in recent days that they now see cutting rates as soon as the Fed's next policy meeting in July due to recent mild inflation readings.

But other officials have pushed back on that urgency and warned that it is too soon to know the true effects of tariffs on inflation.

Some names have already circulated in Washington as possible replacement for Powell. One is former Fed governor Kevin Warsh, considered by many to be a frontrunner for the job. Waller is another current Fed official considered by some central bank watchers as a possible pick.

Bloomberg has reported that the name of Treasury Secretary Scott Bessent is also now being circulated as a possible replacement for Powell.

Bessent told lawmakers earlier this month he would like to remain in his seat until 2029, but he did not dismiss the possibility of becoming the next chair of the Fed.

Bessent said he has "the best job" in Washington and is "happy to do what President Trump wants me to do," while noting that "I would like to stay in my seat through 2029" to help carry out the administration’s agenda.

Source: finance.yahoo

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Adam

Forex

The EUR/USD has eased back a tad after climbing to a fresh 2025 high on Tuesday. Much of the pair’s gains over the past couple of days stem from US dollar weakness linked to the collapse in oil prices and shifting expectations around Fed policy. The markets are now fully pricing in a September rate cut, but calls are also growing for a cut in as early as July, which was not even on the radar at the start of the week.

News of the ceasefire agreement and the corresponding collapse in oil prices has certainly helped to undermine the dollar. The focus is turning to macroeconomics again and away from geopolitics, judging by how markets have behaved in the last couple of days. It looks like investors are fully confident that the ceasefire agreement will not be broken, which is why oil prices are still lower and global equities are near recent record highs again.

Fed Chair Was Neutral to Slightly Dovish

Powell was a little more neutral to slightly more dovish than markets had anticipated when he testified yesterday, no doubt helped by the collapse in oil prices. The US dollar index is now trading a little firmer, especially against the USD/JPY while also finding some mild support against other currencies too.

The dollar bears will need to see further signs of weakness in the US economy to sell the greenback aggressively. On that note, there is not much data to look forward to today. But yesterday’s CB consumer confidence data came in weaker to provide fresh evidence of weakening consumer sentiment.

There is also the possibility we could see a more mixed performance from the dollar, rising against weaker currencies and falling against the risk-sensitive currencies. That is, of course, unless a fresh flare-up in the Middle East conflict sends oil prices spiking again.

What Will Markets Focus on Next?

Markets are now shifting their attention to the second day of Powell’s testimony later today, and expectations are that he will repeat more of what we already heard the day before. Recent dovish hints from a string of policymakers, including Waller, Bowman, and Goolsbee, who all expressed openness to earlier-than-expected rate cuts, means the upside potential for the dollar should remain limited while risk appetite remains strong.

However, if Powell walks back on the dovish Fed commentary today, then we could see the dollar turn more mixed. It could, for example, rise against low-yielding currencies while underperforming risk-sensitive currencies like commodity dollars.

Meanwhile, the next big data release is the May core PCE inflation figure—the Fed’s preferred inflation measure – which will come out on Friday. The FOMC expects core PCE to end the year at 3.1%, a touch higher than the headline rate. These projections, however, rest on fragile assumptions about the impact of trade tensions and oil prices.

Soon, the focus will also turn back to trade and tariffs. With the July 9 deadline fast approaching, it is unlikely we will see a notable dollar recovery unless the US manages to strike deals with some of the more important trading partners like China.

Ceasefire Weighs on Crude Oil and Dollar

After holding its own surprisingly well during the height of the conflict, the EUR/USD has turned notably more bullish this week as markets shed the geopolitical risk premium tied to the Middle East. With Iran, Israel, and the US all agreeing to a ceasefire, and oil prices plunging sharply over the last day or so, traders have been quick to rotate back into dollar shorts.

Now, unless oil prices spike again, it is unlikely that the dollar will find support from this source. Normal day-to-day oil volatility should not cause too much concern for FX traders.

Mixed Eurozone Data

The broader EUR/USD outlook remains balanced. While the dollar has largely been on the back foot so far this week, the euro’s own fundamentals are far from compelling. Monday’s eurozone PMIs landed roughly in line with expectations, showing that while business sentiment has stabilised, the economic outlook still points to stagnation.

On Tuesday, German IFO survey, however, was a touch stronger at 88.4 vs. 87.5 last, though nothing ground-breaking. Later in the week, flash CPI prints from France and Spain will shed light on inflation dynamics that could influence ECB tone heading into July.

In other words, the euro isn’t rallying on strength. The drop in oil prices removes pressure on Europe’s energy-sensitive economy, which may support the single currency at the margins.

Still, some caution is warranted. The move higher in EUR/USD could stall if Powell resists delivering any dovish surprises today, or we see a string of better-than-expected data. Longer-term, the dollar’s performance will depend on Trump’s ability to strike trade deals.

EUR/USD Technical Analysis and Trade Ideas

The higher highs and higher lows on the chart certainly paint a bullish EUR/USD outlook, or at least, it is largely keeping the bears at bay.

In terms of short-term levels to watch, Monday’s oil-driven high at 1.1581 comes in just above the April high of 1.1573. This means the area between these two levels is now the first zone of potential support to watch. Below that, Friday’s high comes in at 1.1544, and then the psychologically important 1.15 handle comes into focus below that. As before, 1.1450 remains the most important support area, which was successfully defended on Monday. Bearish if we go below it.

On the upside, 1.1631, making the recent high, was tested, and therefore, the first bullish objective was already met. Thereafter, you have round handles like 1.17 and 1.18 as the next potential upside targets.

In conclusion, the EUR/USD outlook has shifted into bullish territory for now—but it’s driven by weakness in the dollar more than strength in the euro. Traders are focusing on fundamentals again as geopolitics takes a back seat.