The Morning Edge: Trump’s Tax Bill Advances Amid Global Warnings on Economic Instability

QUICK SNAPSHOT
Global Sentiment: Risk-on
Factors:  Trade Deals Optimism 

TODAY’S WATCHLIST
- RBI Financial Stability Review Report
- India May Industrial Production Data
- India May Fiscal data 

THE BIG STORY
In a narrow 51-49 vote, the US Senate pushed forward President Donald Trump’s sweeping tax-and-spending mega bill during a marathon weekend session marked by deep partisan divides and procedural delays. The 940-page legislation encompassing Trump's core priorities on immigration, military spending, and tax cuts moved ahead despite defections from two Republican senators and fierce Democratic resistance. Vice President JD Vance and Republican leaders spent hours behind closed doors persuading last-minute holdouts, while Democrats demanded the entire bill be read aloud on the Senate floor to stall its passage.

As Washington charged ahead with unilateral fiscal ambitions, the Bank for International Settlements issued a sobering warning about the global economic fallout of such inward-looking policies. Outgoing BIS chief Agustín Carstens described the international order as entering a “new era of heightened uncertainty,” citing the US-led trade wars and policy fragmentation as major stress points for an already fragile financial system. The BIS report landed just over a week before Trump’s looming July 9 tariff deadline adding urgency to calls for multilateral coordination before economic fault lines deepen further.

DATA
US consumer spending unexpectedly declined by 0.1% in May, marking the second drop this year, as the boost from pre-tariff purchases especially in motor vehicles faded. This came after a 0.2% gain in April and was below economists' expectations for a modest 0.1% rise. The decline highlights signs of softening demand despite resilient services spending, which rose just 0.1%, the weakest increase since November 2020.

Meanwhile, the Personal Consumption Expenditures Price Index the Federal Reserve’s preferred inflation gauge rose 0.1% in May, matching April’s increase. Goods prices edged up 0.1%, restrained by falling gasoline prices, while services costs rose 0.2%, led by housing and food services. However, prices for financial services and insurance fell. On a year-over-year basis, PCE inflation rose 2.3% in May, slightly up from 2.2% in April, indicating that price pressures remain moderate.

WHAT HAPPENED OVERNIGHT
US stocks closed at record highs on Friday, recovering from recent volatility driven by President Donald Trump’s aggressive tariff-driven trade policies. The S&P 500 rose 0.5% to 6,173.07, surpassing its previous high of 6,144.15 set on February 19. The Nasdaq climbed 0.5% to 20,273.46, beating its prior record of 20,173.89. Investor sentiment was lifted by Micron’s strong outlook, which renewed enthusiasm for AI-related stocks. Nvidia gained 1.8%, inching closer to a $4 trillion valuation. Nike surged 15.2% after projecting a smaller-than-expected decline in first-quarter revenue, helping boost the broader market.

US Treasury yields edged higher on Friday, snapping a five-day losing streak, as investors continued to bet on imminent rate cuts by the Federal Reserve. The move followed the release of Personal Consumption Expenditures data, which showed muted inflation pressures and a sharp drop in consumer spending the largest monthly decline so far in 2025. The yield on benchmark 10-year notes rose 2.4 basis points to 4.277%, reflecting expectations that the Fed may soon ease policy to support a slowing economy.

The US dollar reversed earlier losses against the euro on Friday after President Donald Trump announced the end of trade talks with Canada and hinted at possible renewed military action against Iran. The shift in tone dampened risk appetite, sending stocks lower and bolstering safe-haven demand. The euro edged up 0.07% to $1.1707 after data showed French consumer prices rose more than expected in June. The dollar index slipped 0.03% to 97.34, hovering near its lowest level in over three years.

Brent crude oil prices inched higher on Friday, recovering from a midday dip sparked by reports that OPEC+ may raise production in August. Brent crude settled at $67.77 per barrel, up 0.1%, while US West Texas Intermediate crude rose 0.4% to $65.52. Despite the modest gains, both benchmarks posted steep weekly losses of around 12% their largest drop since March 2023, amid easing geopolitical tensions in West Asia and renewed concerns over global demand and potential supply increases.

Day’s Ledger
Economic Data

• Japan June Industrial Production Data
• China June PMI Data
• UK March Quarter Current Account Data
• UK March quarter GDP data
• India May Industrial Production Data
• India May Fiscal data 
• RBI financial stability review report

Corporate Actions

• Jaiprakash Associates to consider financial results
• Astec LifeSciences to consider fund raising
• Bannari Amman Spinning Mills to consider fund raising
• Capri Global Capital to consider fund raising
• Federal Bank  to consider fund raising
• Rashtriya Chemicals and Fertilizers to consider fund raising
• Transwarranty Finance to consider fund raising

Policy Events

• FOMC Member Bostic Speaks  
• ECB President Lagarde Speaks  
• ECB's De Guindos Speaks  

TICKERS

• ALEMBIC PHARMA received final USFDA approval for ANDA of Doxorubicin Hydrochloride Liposome Injection, a cancer treatment drug equivalent to BAXTER’S DOXIL.
• BHEL secured ₹65 billion order from ADANI POWER for supply and commissioning of six 800 MW thermal units, including steam turbine generators and auxiliaries.
• CENTRAL BANK OF INDIA executed agreements post acquiring 25.18% in Future Generali India Life Insurance.
• GAIL INDIA plans to acquire 1.07 billion crore shares of Talcher Fertilizer, a JV to revive Odisha’s coal-gasification-based plant.
• HAL recommended ₹15 final dividend per equity share for FY25.
• HIND RECTIFIERS secured two orders worth ₹1.01 billion and ₹1.27 billion from INDIAN RAILWAYS.
• HINDUSTAN OIL EXPLORATION temporarily suspended production at Block B-80 due to adverse weather.
• J&K BANK appointed Ketan Kumar Joshi as CFO, replacing Fayaz Ahmad Ganai.
• JYOTI CNC AUTOMATION’s non-promoters to sell 6% stake via block deals. Deal size estimated at ₹15.42 billion.
• LE LAVOIR acquired 64.5% in Ghantiram Foods via all-equity, zero-cash deal. Ghantiram promoters receive equity in LE LAVOIR.
• MAHINDRA HOLIDAYS received ₹3.63 billion show-cause notice for FY19 IGST shortfall on club memberships.
• NHAI issued intent-to-terminate notice to Wainganga Expressway, a KALPATARU PROJECTS unit, citing premium defaults and contract violations.
• NTPC GREEN ENERGY declared 142.2 MW and 146.7 MW commercial operations at Khavda Solar Projects in Gujarat under NTPC Renewable Energy.
• PIRAMAL ENTERPRISES invested ₹7 billion into PIRAMAL FINANCE via rights issue for general business purposes.
• PRESTIGE ESTATES/ARIHANT GROUP informed that JV Canopy Living LLP to acquire 3.48-acre Chennai land. Project spans 7.5 lakh sq ft; GDV over ₹16 billion.
• RATTANINDIA ENTERPRISES board meeting set for 2 July to consider fundraising via rights issue or other securities.
• RELIANCE JIO added 2.7 million subscribers in May, up from 2.644 million in April. BHARTI AIRTEL added 0.276 million users in May, higher than 0.17 million in April. VODAFONE IDEA lost 0.274 million users in May, improving from 0.647 million drop in April.
• SAMVARDHANA MOTHERSON board approved ₹20.25 billion non-convertible debenture issuance via private placement.
• TORRENT PHARMA to acquire 46.39% in JB CHEMICALS for ₹119.17 billion. Valuation at ₹256.89 billion. Torrent will also launch a mandatory open offer for 26% and may buy 2.8% from employees.
• WAAREE SOLAR AMERICAS won a 540 MW solar module supply order from a US-based utility-scale solar and energy storage project developer.

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