Key Stories from the Past Week: A Sweeping Bill & UK Budget Angst
Date: July 6, 2025
Overview
This week’s key financial and political developments include the passage of President Trump’s significant domestic policy bill, strong job data impacting rate cut expectations, and ongoing fiscal challenges in the UK. Additionally, tensions between Elon Musk and Donald Trump have resurfaced, affecting Tesla's stock performance.
1. President Trump’s “Big Beautiful Bill” Passes
The bill, which passed with a narrow 218-214 vote, introduces substantial changes to domestic policies. It faced considerable opposition, including criticism from Elon Musk, which reignited their public feud. The passage of this bill has implications for various sectors and could influence market dynamics moving forward.
2. Strong Job Data Weighs on Rate Cut Expectations
The US Non-Farm Payrolls (NFP) report revealed stronger-than-expected job gains of 147,000, surpassing the anticipated 106,000. The previous month’s data was also revised upward. The unemployment rate fell to 4.1%, down from the expected 4.3%. As a result, the likelihood of a rate cut in July has diminished, leading to a rally in yields, particularly a notable 8 basis point increase in the 10-year yield. Analysts are now concerned that if the labor market remains robust, further cuts in September may also be off the table.
3. UK Budget Troubles
In the UK, fiscal issues have intensified following a series of policy reversals that have created a significant budget shortfall. The Labour Party is experiencing internal friction, which has contributed to a decline in the British Pound against both the US Dollar and the Euro. Prime Minister Keir Starmer's failure to support Chancellor of the Exchequer after a controversial welfare reform reversal has left a £6 billion gap in the budget, resulting in a selloff in Gilts and a 19 basis point increase in 30-year yields.
4. Tesla Under Pressure
Tesla's stock faced downward pressure, dropping nearly 7% early in the week amid the renewed conflict between Elon Musk and Donald Trump. Musk's criticism of Trump's bill and Trump's subsequent comments regarding Musk's subsidies have fueled market volatility. Additionally, Tesla reported a 13.5% decline in Q2 deliveries, which fell short of estimates, although shares rebounded slightly by 5% following the announcement.
5. Upcoming Insights
This week, Saxo released its Q3 Investor and Macro Outlooks, highlighting key issues and trends to watch in the upcoming quarter. The Macro Outlook suggests a hope for less chaos and more clarity, while the Investor Outlook emphasizes the importance of diversification beyond American markets.
Conclusion
The developments over the past week reflect significant shifts in both the political landscape and economic indicators, which are likely to influence market strategies and investor sentiment in the near future.