FEDERAL GOVERNMENT RELATIONS
July rate cut expectations rise after Powell comments
Expectations for a Federal Reserve rate cut later this month rose after Chair Jerome Powell said in Portugal that any decision will depend on incoming economic data. Futures markets now reflect a 25% chance of a cut at the Fed's July 29-30 meeting, up from 20% before Powell's comments. He added that the Fed had been on track to continue easing policy gradually, but concerns over the economic impact of tariffs have prompted a more cautious approach.
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"One Big Beautiful Bill" advances after narrow Senate vote
The Senate narrowly approved the One Big Beautiful Bill Act, with Vice President JD Vance casting the tie-breaking vote. The tax and spending legislation would extend tax cuts from President Donald Trump's first term, eliminate income taxes on tips and overtime, increase spending on defense and immigration enforcement, and reduce $1 trillion from Medicaid and other healthcare programs. It now moves to the House, where growing Republican opposition threatens the chances of meeting Trump's Friday deadline for the bill's passage.
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Fed stress test results are positive sign for regulation
Banks' strong performance in the latest Federal Reserve stress test surpassed even the most optimistic expectations, hinting at a regulatory trajectory that will benefit financial institutions and setting banks up to expand their buybacks and dividends, experts say. The results come as the Fed is considering a proposal to lower the capital requirements of the largest banks, as well as updates to reduce volatility in its stress tests. Meanwhile, banks' second-quarter earnings reports will be in the spotlight over the next couple of weeks.
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HUD rescinds several regulatory requirements for FHA-backed mortgages
In a move intended to reduce the cost of homeownership and eliminate unnecessary burden, the U.S. Department of Housing and Urban Development recently rescinded more than a dozen regulatory requirements in the Federal Housing Administration’s single-family mortgage insurance program.