Trump Advocates 'Beautiful Act' For U.S. Economic Revival

Political

Cryptocurrency

Summary:

President Donald Trump unveiled the "Beautiful Act" on July 2nd with a focus on economic growth and reducing the U.S. deficit.

Key Points:

● President Trump pushes "Beautiful Act" for economic growth.

● Markets react cautiously to proposed deficit cuts.

● No direct impact expected on cryptocurrencies.

President Donald Trump unveiled the "Beautiful Act" on July 2nd with a focus on economic growth and reducing the U.S. deficit. The act aims to halve the deficit, potentially ushering in substantial investments that could invigorate the economy.

U.S. President Donald Trump introduced the "Beautiful Act" in an effort to spur economic growth by reducing the national deficit. He described this legislation as a pivotal move toward experiencing a robust economic revival. House Ways and Means Committee Chairman Jason Smith reinforced the importance of unity among Congressional Republicans, emphasizing the act's capacity to deliver on promises of better wages and opportunities, aligning with voter demands.

Trump's "Beautiful Act": Economic Measures and Legislative Goals

The act proposes significant fiscal measures, including $12.5 billion for air traffic control enhancements and $25 billion allocated to missile defense. Additionally, a notable focus on family benefits includes a doubling of the child tax credit to $2,200. If passed, the bill is designed to expand household liquidity by implementing tax cuts for those earning under $100,000 annually, while also raising the federal debt ceiling by $5 trillion.

Market reactions to the proposal remain cautious. Despite its ambitious goals, there is skepticism regarding implementation and potential macroeconomic ripple effects. Airline industry stakeholders have expressed support for the proposed infrastructure improvements, alongside America's Credit Unions backing favorable tax conditions. However, the lack of direct benefits to cryptocurrency markets has prompted minimal discourse among blockchain industry leaders, with no public stances addressed by prominent figures such as Vitalik or CZ.

"House Republicans must stay united and pass this bill to deliver the generational change that 77 million voters demanded – better wages, lower taxes, more opportunity. As I have said, failure is not an option. Let's get this done for the American people." Jason Smith said, Chairman, House Ways and Means Committee.

Market Dynamics: Bitcoin Stability Amid New Legislation

Did you know? In 2017, broad U.S. tax reductions led to significant business investments, though the crypto rally of that year was more influenced by cyclical trends.

According to recent data, Bitcoin (BTC) trades at $108,052.79, with a market cap at $2.15 trillion and a fully diluted market cap of $2.27 trillion. Its 24-hour trading volume reached $46.68 billion, reflecting a 4.90% change. BTC has shown varied price movements, including a 2.02% increase over 24 hours and a 3.79% rise in 30 days. However, more substantial growth was recorded over the past 90 days at 32.54%.

Bitcoin(BTC), daily chart, screenshot on CoinMarketCap at 14:49 UTC on July 2, 2025.

Research team suggests that the "Beautiful Act" might influence the economic landscape through tax reforms and infrastructure spending. There is potential for increased liquidity akin to the 2020 stimulus, yet a direct effect on the regulatory framework for digital assets remains unlikely. Historical data suggests fiscal policy shifts can prompt risk-on sentiment; however, any cryptocurrency market impact is presently speculative.

Source: CryptoSlate

Risk Warnings and Disclaimers

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Adam

Economic

Part 1 of this article (Fueling AI Data Centers: Behind The Meter Solutions) explained how data centers are leveraging the abundance and relative affordability of natural gas to fuel Behind the Meter (BTM) power generators. Part Two advances the discussion to investing in this promising innovation.

This article looks past the data center operators and focuses on the natural gas pipelines and the manufacturers of natural gas power plant equipment. We also highlight a couple of well-traded ETFs with exposure to Behind the Meter solutions and a company with a unique product for on-site power generation. Lastly, we address some key considerations and risks associated with such investments.

Natural Gas Pipelines

Before reviewing specific pipeline companies that may be well-positioned to profit from BTM natural gas power plants, it’s worth considering how the location of existing pipelines provides a distinct advantage for some pipeline companies.

Like real estate, “location, location, location,” is what matters. Companies with pipelines closest to the data center hubs can offer cheaper energy and quicker deployment times.

For general reference, the graphic below illustrates that Virginia, Texas, and California have the highest number of data centers.

Williams Companies (WMB)

Williams Companies (NYSE:WMB) pipelines move almost one-third of the nation’s natural gas through its network of pipelines. It has existing pipelines servicing the states with the most data centers. Furthermore, the company believes it is well-suited to serve what it calls “emerging markets” in eastern Washington and Salt Lake City.

In addition to having strategic pipeline locations, the company focuses on lateral hook-ups. These are the short pipelines used to divert gas to the power plant from the main lines.

The following paragraph from an article by S&P Global speaks to the significant demand WMB is witnessing for Behind the Meter solutions:

Natural gas midstream giant Williams is receiving an “overwhelming” interest in expansions to meet growing demand from data centers… “Particularly in the Southeast and the mid-Atlantic…we frankly are kind of overwhelmed with the number of requests that we’re dealing with and we are trying to make sense of those projects,” Armstrong said during the company’s second quarter earnings call.

If Williams can execute efficiently to meet the “overwhelming” demand surge, they should see upside to sales and earnings.

Kinder Morgan (KMI)

Kinder Morgan’s (NYSE:KMI) pipeline network is primarily located in the Southeast and Mid-Atlantic regions, where data center growth is experiencing a surge.

The CEO recently noted that competition is fierce and that there are added costs and delays due to states and municipalities with stricter environmental laws and regulations.

The following paragraphs are courtesy of Reuters:

“Data center demand has skyrocketed,” CEO Kimberly Dang said. The overall gas market could grow by 25 billion cubic feet per day over the next five years, she said.

The company said the Gulf Coast Express Pipeline, which it operates and holds a stake in, has green-lighted an about $455 million expansion project that would raise natural gas deliveries by 570 million cubic feet per day from the Permian Basin to South Texas markets.

ONEOK (OKE)

To the best of our knowledge, ONEOK (NYSE:OKE) has not signed Behind the Meter contracts. Nor have we seen management discussions about BTM solutions. However, they are well-positioned to supply gas to data centers. OKE has an extensive network of pipelines in Texas and Oklahoma, located near data center hubs. Moreover, they have multiple storage facilities to ensure reliable gas flow. This is critical for hyperscale facilities with 24-hour workloads.

OKE has significant untapped potential. Furthermore, the proximity of their pipelines to data center hubs makes them a good takeover candidate for a larger multi-product energy company or pipeline competitor.

OKE trades at a cheaper valuation than KMI and WMB. Some of the discount is due to its recent underperformance in share price compared to its competitors. OKE could potentially close the valuation gap if it demonstrates to investors that it can be a supplier of natural gas to data centers, or if another company expresses interest in a partnership or takeover.

Energy Transfer (ET)

Energy Transfer (NYSE:ET) has over 100k miles of natural gas pipelines. The company has a long-term agreement to supply natural gas to CloudBurst data centers in Texas, and they claim they are in discussions with over forty prospective Behind the Meter customers. ET has an extensive pipeline network in Texas, which is home to the second-largest number of data centers in the United States.

Please note that ET is a limited partnership, and as such, it has unique tax consequences and reporting requirements for investors.

Alerian MLP ETF (AMLP)

Alerian MLP ETF (NYSE:AMLP) is an ETF that holds over 90% of its assets in energy Master Limited Partnerships (MLPs). Due to its structure, the ETF shields its investors from the tax consequences and reporting requirements associated with its underlying holdings. The ETF’s largest holding is ET, but it does not provide exposure to WMB, KMI, and OKE, as they are not limited partnerships. That said, some of its other holdings benefit from Behind the Meter-related natural gas demand.

Power Plant Equipment Manufacturers

We now turn our attention to the manufacturers that specialize in equipment for natural gas-fired power generation plants. The key components in a BTM power plant include:

Turbines- Convert natural gas into mechanical energy through combustion.

Generators- Convert mechanical energy into electrical power.

Control and Monitoring- Systems that manage plant operations, helping with efficiency, load balancing, and integration with the data centers.

Turbines

GE Vernova (NYSE:GEV) leads the global market for gas turbines. Following them closely are Siemens Energy and Mitsubishi Power. GE Vernova and Mitsubishi Power turbines have hydrogen-ready capabilities, enabling their customers to align with environmental goals and leverage hydrogen as a future energy source.

The following from GE Vernova describes what they offer for on-site power generation:

GE Vernova offers a broad portfolio of on-site power generation technologies, ranging from simple-cycle aeroderivative turbines to heavy-duty combined cycle systems and cogeneration (CHP) solutions. These assets are tailored to the unique demands of data centers, offering flexible options that support both prime and standby applications.

Generators

Caterpillar (NYSE:CAT), Cummins (NYSE:CMI), and Generac Power Systems are the largest manufacturers of generators used in BTM gas-powered plants. While these companies will benefit, the marginal gains will be diluted due to the extensive scope of their current product offerings.

Control and Monitoring

Honeywell (NASDAQ:HON) is the recognized leader in sales of control and monitoring systems. The following quote regarding one such product is courtesy of Honeywell:

“PowerSpring meter data management (MDM) system is a critical component in realizing the full potential of advanced metering infrastructure (AMI) or smart metering, especially for meters used in the gas distribution business.”

Industrial Select Sector SPDR Fund (XLI)

We are not aware of any ETF that concentrates its holdings solely on Behind the Meter solutions. XLI, however, does hold many of the companies we discuss above. Caterpillar, Honeywell, and GE Vernova constitute roughly 10% of the ETF and are all represented in its top ten holdings.

Bloom Energy (BE)

While Behind the Meter solutions using natural gas traditional power plants are effective, they are not a particularly novel idea. There are many companies with innovative ideas on how to generate electricity more efficiently and cleaner than those we have discussed. We share a brief description of one such company, Bloom Energy (BE).

Bloom (NYSE:BE) is a leading producer of solid oxide fuel cell (SOFC) systems. Per Bloom’s website:

Bloom Energy’s solid oxide fuel cell technology generates clean, reliable, and resilient electricity on-site by converting fuel such as natural gas, biogas, or hydrogen into electricity through an electrochemical process without combustion. This results in significantly lower carbon emissions compared to conventional grid power and provides always-on energy that is cost-effective and sustainable.

The following graphic is courtesy of The International Journal of Sustainable Green Energy.

The key takeaway is that their system is fuel-flexible, capable of using hydrogen, natural gas, or biofuels, and produces significantly lower emissions than fossil fuel-based systems. Its cost is comparable to traditional combustion power plants.

Bloom doesn’t disclose its revenue directly resulting from data centers, but its revenue grew by almost 40% in the first quarter compared to the same quarter last year. Moreover, as shown below, revenues are on a consistently positive trajectory.

While its technology is promising, especially for customers in states and nations with stricter environmental laws, the company has been losing money for most of the last decade. Moreover, they have taken on over $1.5 billion in debt. Its ratio of debt to equity is 2.53. Generally, a debt-to-equity ratio above 2.0 is considered high. That said, capital-intensive industries, such as Bloom’s, tend to have ratios between 1.5 and 3.0.

While leverage can be beneficial in the long run, the company needs to generate profits in the short term; otherwise, it risks adding to its already onerous debt load.

Bloom has a forward P/E of 27 and a PEG ratio of approximately 1, assuming earnings can grow in line with revenues. The valuations for a company with such potential are usually much higher. Its tempered valuations are an omen that investors have concerns about the technology and or the debt load. It has a market capitalization of approximately $5 billion, making it an easy takeover candidate.

The graph below shows that its shares have been trading well recently, but they are at the same price as when they were issued in 2018.

Investing Strategies For Behind-The-Meter Solutions

If investing in BTM solutions for data centers is of interest to you, we strongly suggest diversifying among the many players and sectors in the burgeoning industry. For instance, we would consider having one or multiple stocks from some of the following industries:

Natural gas midstream pipeline companies

Natural gas turbine and generator manufacturers

Natural gas producers

Control and Monitoring system manufacturers

Utilities developing BTM solutions to ease grid constraints

Considerations

As we noted earlier, BTM is a bridge technology. It will help meet short and intermediate-term data center power demands. Over time, however, nuclear and renewable energy sources could prove to be more efficient and cost-effective.

While political trends will ebb and flow, the world’s leading industrial nations have been gravitating toward more renewable energy sources and less carbon-based energy.

Changes in regulatory regimes at the local, state, and national levels should be closely monitored.

Technology changes rapidly. For consideration, might AI engines invent a more efficient and cost-effective energy source, rendering Behind the Meter solutions obsolete?

Source: investing

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Warren Takunda

Economic

Central Bank

Treasury Secretary Scott Bessent said Tuesday night that he thinks the Federal Reserve could cut interest rates by September or "sooner" because of mild inflation thus far from President Trump’s tariffs.

"I think that the criteria is that tariffs were not inflationary. If they're going to follow that criteria, I think that they could do it sooner than then, but certainly by September," Bessent said, adding that “I guess this tariff derangement syndrome happens even over at the Fed."

His comments on Fox News’s "The Ingraham Angle," come as Bessent’s boss, President Trump, intensifies his own pressure on the Fed and chairman Jerome Powell to lower rates by as many as 3 percentage points.

"Jerome—You are, as usual, 'Too Late'," Trump told Powell in a note the president posted on Truth Social Monday, telling the Fed chair that he has "cost the USA a fortune" and urging him to "lower The Rate—by a lot!"

Bessent has also ramped up his commentary about the Fed this week, once again arguing that no inflation has yet shown up from tariffs and if it does it will be a one-time increase that wouldn’t justify any rate increases.

Bessent is among the candidates to replace Powell when the Fed chair’s term expires next May, according to people close to the administration.

On Bloomberg Monday the Treasury secretary compared the Fed to an old person who takes a fall and then is likely to fall again because he or she keeps looking down at his or her feet. The original fall in his view was the Fed’s slow reaction to a rise in inflation in 2022.

“They seem a little frozen at the wheel here,” he told Bloomberg.

On Tuesday, Powell didn’t rule out an interest rate reduction this month at the Fed’s next meeting on July 28-29 but noted the central bank would have cut rates by now if not for the tariffs introduced by the Trump administration.

“We went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs,” he said on a panel at a European Central Bank monetary policy conference in Portugal.

The Fed lowered rates by a full percentage point in 2024 but has held rates steady so far in 2025 as it waits to see if inflation will pick up this summer due to the tariffs.

"I wouldn't take any meeting off the table or put it directly on the table," Powell said when asked about the possibility of a cut in July. "It's going to depend on how the data evolved."

'Tariff derangement syndrome happens even over at the Fed'

Bessent on Tuesday told Fox that Fed officials recently lowered their growth forecast for the US economy, and that should be reason enough to proceed with cuts by September given that inflation has come down since the period in September 2024 when the Fed decided to cut by 50 basis points.

"Sure, why not the fall?" he said.

Another sign of a slowdown in the labor market showed up Wednesday in data revealing that private employers unexpectedly cut 33,000 jobs in June.

The data from ADP showed private payrolls fell by 33,000 last month in June, below the 29,000 job gains seen in May and the 98,000 additions expected by economists.

This marked the first month of job losses in the private sector since March 2023. May's initial reading of 37,000 private payroll additions had been the lowest monthly total since March 2023.

Another report from the Labor Department will be released Thursday. Economists expect that report to show 116,000 nonfarm payrolls were added in June, a move lower from the 139,000 seen in May. The unemployment rate is anticipated to have moved up to 4.3% from 4.2% the month prior.

Two Fed governors, Christopher Waller and Michelle Bowman, have both made a case for rate cuts in July, arguing they are more worried about the labor market and unemployment than inflation at this point.

Other Fed colleagues continue to argue that the Fed should wait on any rate cuts to gauge the ultimate impact on inflation.

Atlanta Federal Reserve president Raphael Bostic Monday said that he wants to wait and see how tariffs play out in the economy before making a decision on what to do with interest rates, cautioning that Americans could see higher inflation from tariffs that could be longer lasting.

“I like to move in a direction when I know which direction to move in,” said Bostic in a conversation in the UK. “That would for me require more information than we have today.”

Source: Yahoofinance

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Adam

Stocks

London stocks were mixed at midday on Wednesday as investors weigh US trade talks and President Donald Trump's new tax-cut and spending bill.

The FTSE 100 index was up 21.48 points, 0.2%, at 8,806.81. The FTSE 250 was down 116.73 points, 0.5%, at 21,626.43, and the AIM All-Share was down 1.25 points, 0.2%, at 771.69.

The Cboe UK 100 was up 0.3% at 878.80, the Cboe UK 250 was down 0.4% at 19,129.08, and the Cboe Small Companies was up 0.2% at 17,463.01.

A ban in the UK on "exploitative" zero-hours contracts and "day-one" protections against unfair dismissal will not come into force until 2027 as the government seeks to give businesses time to prepare for its workers' rights reforms.

Ministers have opted for a "phased" rollout of the changes, which were a Labour manifesto promise, in order to balance safeguards for employees with "the practical realities" of running a company.

Prime Minister Keir Starmer has hailed the government's flagship Employment Rights Bill, which is making its way through Parliament, as "the single biggest upgrade to workers' rights in a generation".

Its measures include bolstered rights to parental leave, a crackdown on "fire and rehire" practices and the removal of the lower earnings limit and waiting period for statutory sick pay.

Under the new legislation, bosses will be also be required to offer workers a guaranteed hours contract reflecting the hours they regularly work, as well as reasonable notice of shifts and payment of shifts.

In European equities on Wednesday, the CAC 40 in Paris improved 1.1%, while the DAX 40 in Frankfurt was 0.3% to the green.

"It's a solid day for European equities as all the major indices moved higher amid progress in the US on policy plans to lower taxes and progress with trade negotiations," said AJ Bell analyst Dan Coatsworth.

"Commodity producers, financials, utilities and industrials led the way on the UK stock market. The fact both risk-on and defensive sectors moved higher would suggest a general sense of optimism among investors.

"The US Senate has passed Donald Trump's tax-cut and spending bill which means the attention now shifts to the House of Representatives for approval. At the same time, there were developments on trade talks between the US and India which gave investors some encouragement. Trump seems optimistic about striking a deal with India, yet there would still be a long list of other countries that need to do the same before 9 July if they want to avoid high tariffs."

US President Donald Trump said Tuesday a trade deal with Japan was unlikely before the July 9 deadline, threatening to raise tariffs on Japanese imports to 30 or 35%.

Speaking to reporters aboard Air Force One, Trump criticised Japan's reluctance to accept imports of US rice, as well as the imbalance in auto trade between the two countries.

On Tuesday, Trump's key tax and spending bill cleared an important hurdle in the US Congress when the Senate approved what has been dubbed the "One Big Beautiful Bill" by a wafer-thin majority after a marathon overnight session.

A centrepiece of the bill is the permanent extension of tax breaks from Trump's first term in office. These are to be financed by cuts to social benefits - a point that has met with fierce criticism from the Democrats.

Stocks in New York were called higher. The Dow Jones Industrial Average was called 0.2% higher, the S&P 500 index up 0.1%, and the Nasdaq Composite also up 0.1%.

The yield on the US 10-year Treasury was quoted at 4.28%, widening from 4.26%. The yield on the US 30-year Treasury was quoted at 4.81%, widening from 4.79%.

EU foreign affairs chief Kaja Kallas on Wednesday urged Beijing to stop undermining Europe's security, as China's top diplomat held talks in Brussels ahead of a leaders' summit later this month.

"China is not our adversary, but on security our relationship is under increasing strain," Kallas said ahead of meeting China's Wang Yi.

"Chinese companies are Moscow's lifeline to sustain its war against Ukraine. Beijing carries out cyberattacks, interferes with our democracies, and trades unfairly. These actions harm European security and jobs."

Wang's visit to Brussels – following which he will head to Berlin and Paris – comes some three weeks ahead of a summit between Chinese President Xi Jinping and the EU's top officials in Beijing.

Meanwhile, the European Commission proposed on Wednesday to cut greenhouse gas emissions by 90% by the year 2040, with flexibility to address concerns from EU states that must greenlight the plans.

The long-delayed target is a key milestone towards the EU's 2050 carbon neutrality goal. To sway sceptical capitals, the EU executive proposes that from 2036, the bloc's 27 countries can count carbon credits purchased to finance projects outside Europe, for up to three percent of their emission cuts.

Meanwhile, Ireland's unemployment rate remain steady in June, data published by the Central Statistics Office showed Wednesday.

The seasonally adjusted unemployment rate was 4.0% in June, unchanged from May, though down from 4.4% in June 2024.

The pound was quoted down at USD1.3700 at midday on Wednesday in London, compared to USD1.3705 at the equities close on Tuesday. The euro stood higher at USD1.1774, against USD1.1770. Against the yen, the dollar was trading higher at JPY143.98 compared to JPY143.62.

SSP Group led the FTSE 250 around midday, up 9.3%.

The London-headquartered operator of food outlets at travel locations and owner of the Upper Crust brand provided details regarding the anticipated initial public offering of Mumbai-based Travel Food Services on the Indian Stock Exchange.

It said K Hospitality, its joint venture partner in India, noted that TFS filed its Red Herring Prospectus with the Indian regulatory authorities regarding the proposed IPO.

K Hospitality expects a market capitalisation of between INR137.6 billion and INR144.8 billion, around GBP1.17 billion to GBP1.23 billion.

The IPO is expected to take place on July 14.

SSP reiterated that it will soon buy additional shares in TFS for around GBP12.5 million, after which it will hold a 50.01% stake in TFS's issued share capital.

Wizz Air was also among the FTSE 250's winners, rising 2.5%.

The Budapest-based budget airline said it carried 5.9 million passengers in June, up 11% from 5.3 million a year before, with load factor improving to 92.1% from 91.7%. The airline noted that June was better month for it than May, with faster annual growth in passenger numbers and a bigger improvement in load factor.

On a 12-month basis, Wizz carried 65.0 million passengers, up 4.7% from 62.1 million the year before. Load factor improved to 91.2% from 90.1%.

Dublin-based rival Ryanair carried 19.9 million passengers in June, up 3.1% from 19.3 million a year before, while its load factor was steady at 95%. The carrier said it operated more than 109,000 flights last month.

On a rolling 12-month basis, Ryanair carried 202.6 million passengers, up 7.3% from 188.8 million the year before. Load factor over the longer period stayed at 94%.

Ryanair was 0.6% higher in Dublin.

At the other end, Blue Star Capital sank 13%.

The investment company with a focus on blockchain, esports and payments raised GBP1.2 million through a placing of 6.4 million shares at 18 pence per share.

The fundraising was led by Axis Capital Markets Ltd, and Blue Star intends to use the proceeds to invest at least GBP1 million into SatoshiPay Ltd, the blockchain payments firm in which it holds around a 50% stake.

The investment will be used by SatoshiPay to increase its existing digital asset treasury, including bitcoin and other cryptocurrencies. Blue Star will receive payment of the equivalent value of any capital increase in the portfolio.

Blue Star aims to raise a further GBP100,000 in an offer to retail investors of 555,556 new shares at the same price as the institutional placing.

Brent oil was quoted higher at USD67.83 a barrel at midday in London on Wednesday from USD66.97 late Tuesday.

Gold was quoted up at USD3,342.87 an ounce against USD3,286.04.

Still to come on Wednesday's economic calendar, ADP private payrolls figures in the US.

Source: marketscreener

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Damon

Economic

President Donald Trump said he had reached a trade deal with Vietnam following weeks of intense diplomacy between the nations and ahead of a deadline next week that would have seen higher tariffs imposed on the country’s imports.

Under the agreement, Vietnam will pay a 20% tariff on exports to the US, with a 40% levy on any transshipments, Trump said in a social-media post on Wednesday. Trump said that Vietnam had agreed to drop all levies on US imports.

“In other words, they will “OPEN THEIR MARKET TO THE UNITED STATES,” meaning that, we will be able to sell our product into Vietnam at ZERO Tariff,” Trump wrote. The president said he he had secured the deal after discussions with Communist Party chief To Lam.

The deal with Vietnam would be just the third announced following agreements with the UK and China as trading partners race to cut agreements with the US ahead of a July 9 deadline.

Trump had imposed a 46% duty on Vietnam as part of his initial rollout of so-called reciprocal tariffs in early April that were levied on dozens of countries, but were then pared back to 10% to allow time for negotiations.

The Southeast Asian nation has seen its sales to US markets surge in recent years, partly because manufacturers shifted production there from China. It’s a major supplier of textiles and sportswear, hosting factories for companies such as Nike Inc., Gap Inc. and Lululemon Athletica Inc. Vietnam was the sixth-biggest supplier of US imports last year, sending goods worth almost $137 billion, according to Census Bureau data.

Shares in furniture stocks and apparel makers rose after Trump’s post, with ON Holding, Nike and Lululemon jumping to hit session highs, rising as much as 7.2%, 3.9% and 2.9%, respectively.

The deal with Vietnam was struck after weeks of discussions during which the US pressured the country to get tougher on trade fraud, ensure stricter enforcement against the transshipment of Chinese products, and also pushed for the removal of non-tariff barriers.

Vietnam offered to remove all tariffs and repeatedly promised to purchase more American goods. Senior Vietnamese officials flew to the US to rally support and sign deals, including for $3 billion of agricultural goods. The trade minister also wooed executives from Nike, Gap and others to encourage them to get behind negotiation efforts.

Brands raced to move manufacturing to Vietnam over the past decade as US-China tensions escalated. The industrial shift from China to Vietnam also helped build the kind of massive trade gap that made it a prime tariff target for Trump.

Last year, Vietnam’s trade surplus with the US was the third-largest globally on a country basis behind only China and Mexico. Shipments in May jumped 35% as firms sought to get goods onto vessels as quickly as possible ahead of the deadline.

Source: Bloomberg Europe

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Warren Takunda

Economic

Central Bank

The chair of the Federal Reserve, Jerome Powell, has blamed Donald Trump’s tariffs for preventing the immediate interest rate cuts the president has demanded.

Trump has repeatedly urged Powell to reduce borrowing costs in the US economy. On Tuesday, he said: “Anybody would be better than J Powell. He’s costing us a fortune because he keeps the rate way up.”

He spoke not long after Powell told a European Central Bank (ECB) event in Portugal that the Fed was waiting to assess the inflationary impact of the president’s trade policies.

Speaking on a panel of central bankers in Sintra, the Fed chair said: “In effect we went on hold when we saw the size of the tariffs. Essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs. We didn’t overreact, in fact we didn’t react at all. We’re simply taking some time.”

Asked if the Fed would have cut its key Fed funds rate further, from the current target range of 4.25-4.5%, if it wasn’t for tariffs, Powell said: “I think that’s right.”

Economists generally expect tariffs to be inflationary, as the costs of paying them tend to be passed on to consumers. The effects are highly uncertain, however, as some retailers may be able to absorb some or all of the costs, or switch to alternative suppliers.

Powell said: “We haven’t seen effects much from tariffs, and we didn’t expect to by now. We’ve always said the timing, amount and persistence of the inflation would be highly uncertain and it’s certainly proved that.”

He added: “We’re watching. We expect to see over the summer some higher readings, but we’re prepared to learn that it can be higher, or lower, or later or sooner than we’d expected.”

Trump has consistently sought to undermine Powell since returning to the White House, peppering him with insults such as, “major loser” and “very dumb”, and reportedly considering replacing him before his term finishes in May next year.

When these personal attacks were raised at the ECB event, the Fed governor received a round of supportive applause from the audience – and from his fellow central bankers on the panel.

The US treasury secretary, Scott Bessent, has suggested the Trump administration might take advantage of the opening of a vacant seat on the Fed’s board to appoint a potential successor.

“There’s a seat opening up … in January. So we’ve given thought to the idea that perhaps that person would go on to become the chair when Jay Powell leaves in May,” he told Bloomberg TV.

Speculation that Trump could replace Powell early has been one factor behind the depreciation of the dollar, which has suffered its weakest first-half in more than 50 years.

Speaking alongside Powell on Tuesday, the ECB president, Christine Lagarde, suggested it was too soon to declare “mission accomplished” on inflation in the eurozone; while the Bank of England governor, Andrew Bailey, said there were signs that the jobs market in the UK was slowing.

Source: Theguardian

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Adam

Bond

The 10-year U.S. Treasury yield rose on Wednesday as investors digested weak data for the jobs market and weighed the impact of President Donald Trump’s tax-and-spending package, which narrowly passed the Senate on Tuesday.

The 10-year yield rose about 2 basis points to 4.271%. The 30-year bond yield was up about 4 basis points at 4.818%. The 2-year note yield fell 2 basis points to 3.754%.

One basis point is equal to 0.01%, and yields and prices move in opposite directions.

Yields were higher earlier in the session before the ADP private payrolls data showed a decline of 33,000 jobs in June. Economists were expecting a gain of 120,000 jobs, according to Dow Jones. A weakening jobs market could spur the Federal Reserve to cut interest rates, but traders tend to put less weight on the sometimes volatile ADP numbers than the official federal jobs data.

Trump’s megabill cleared the Senate on Tuesday with a final vote of 51-50. The legislation now has to go through the House, where there are still some holdouts from Republican lawmakers.

The bill is expected to add $3.3 trillion to the fiscal deficit over the next decade, and some Republican lawmakers continue to show resistance to the bill. Trump has insisted that he wants the bill on his desk by July 4.

“We expect to see more volatility in fixed income, even once they get the bill passed, whatever that looks like,” said Jose Rasco, CIO of HSBC Global Private Banking and Wealth Management Americas, on “Closing Bell: Overtime.”

“Once these things get resolved and once the [Federal Reserve] gets back in gear, there’s a lot of upside here,” Rasco said.

Investors are also waiting to see more negotiations on trade deals as Trump’s 90-day pause on some of the highest tariffs are due to expire next week.

On the economic data front, investors will await the nonfarm payrolls report for June on Thursday. The bond market will be closed on Friday for Independence Day.