VP Vance Breaks Tie on $5T Bill , Crypto Snubbed Again
Digital Asset Market: The US Senate narrowly passed President Donald Trump’s “One Big Beautiful Bill Act,” but it did so without including any provisions on cryptocurrency taxes, despite efforts from Wyoming Senator Cynthia Lummis. Lummis had proposed addressing what she called the “unfair tax treatment” of crypto miners and stakers, hoping to prevent double taxation, but her amendments were not included in the final legislation. The bill passed in a 50-50 split with Vice President JD Vance casting the tiebreaking vote, amid broader debates over healthcare, AI regulation, and tax cuts. The legislation will now return to the House of Representatives, still facing opposition and with no changes to the current tax treatment of crypto activities.
Macro Economics: President Trump has reiterated that he may reinstate higher tariffs on trading partners by his self-imposed July 9 deadline, possibly ending the current pause on "Liberation Day" duties, as his administration shifts focus from large trade deals to smaller, quick agreements that could help some countries avoid harsh new levies. While negotiations continue, Trump has threatened key partners such as Japan with tariffs as high as 35 percent, far above current rates, and the EU is pushing for exemptions on products like pharmaceuticals and autos. Meanwhile, revenue collected from tariffs has surged, with June expected to bring in another $27 billion, taking total tariff revenue since the start of the fiscal year to $121 billion, a growing figure even though it remains a small portion of overall government income. The debate continues over who ultimately bears the cost of these duties, as US importers pay the tariffs but the impact on consumers has been less clear in terms of noticeable inflation.
Equities: The Dow Jones Industrial Average rose 0.91% on Tuesday to 44,494.94 as investors rotated out of technology stocks and into health care shares at the start of the second half of 2025, while the S&P 500 slipped 0.11% and the Nasdaq Composite fell 0.82%. Tech giants like Nvidia and Microsoft declined, while health companies such as Amgen and UnitedHealth rallied, helping the Dow outperform. The shift comes after a strong tech-led second quarter. Meanwhile, Tesla shares dropped after Donald Trump criticized government subsidies to Elon Musk’s companies and tensions continued over Trump’s massive tax and spending bill, which passed in the Senate and awaits a House vote. Fed Chair Jerome Powell said further rate cuts were on hold due to tariffs, and traders are watchful as Trump’s tariff reprieve nears expiration. Despite prior volatility from tariffs earlier in the year, stocks have rebounded, with the S&P 500 and Nasdaq ending the second quarter with significant gains.
The Fed and US Treasury: Federal Reserve Chair Jerome Powell said the Fed would have eased monetary policy and possibly cut rates by now if not for President Trump’s tariff plans, which increased inflation forecasts and led the central bank to hold rates steady. Powell emphasized the Fed is making decisions "meeting by meeting" and that the timing of any rate cuts will depend on incoming data. Despite criticism from Trump, who has called Powell "terrible," Powell reiterated the Fed's commitment to achieving price stability, maximum employment, and financial stability. While global and domestic uncertainties remain high due to trade policy shifts, Powell avoided commenting on his future as Fed chair beyond his current term.
Geopolitical: The Senate narrowly passed President Trump’s $3.3 trillion tax and spending bill by a 51-50 vote after a marathon voting session, late-night negotiations, and intense internal GOP divisions. The bill, featuring major tax cuts, a $5 trillion debt ceiling increase, deep Medicaid reductions, and a rollback of clean energy subsidies, now heads to the House, where final passage is uncertain due to disagreements among Republicans over Medicaid cuts, SNAP changes, and deficit concerns. Key Senators, especially Lisa Murkowski, played a pivotal role in the Senate drama, while Speaker Mike Johnson faced pressure to align the final bill with House priorities. Tensions remain high, and despite Senate Majority Leader John Thune’s assurances of unity, the legislation’s fate is still somewhat uncertain as both Republican factions continue to clash over its contents.
View from our desk
Bitcoin Withstands Sell Pressure
Despite a wave of profit-taking from mid- to long-term holders, particularly those holding coins for several years, Bitcoin has maintained a steady range between $100,000 and $110,000. This stability suggests the market is absorbing selling pressure efficiently, supported by consistent demand even as older coins change hands. The movement of coins from long-term to newer holders reflects a classic bull market pattern, signaling strength, not weakness. With structural support in place, we believe Bitcoin is primed for a bullish move in July.
Debt Ceiling Bill Clears Senate, Liquidity to Follow
The “One Big Beautiful Bill Act” passed the Senate this week and is expected to pass the House without significant changes. The bill raises the debt ceiling by $5 trillion, a move that has historically acted more as a spending signal than a constraint. We anticipate a renewed wave of treasury issuance, which will likely increase dollar liquidity and benefit risk assets over time. Although Bitcoin pulled back slightly on the headline, we view this as a temporary reaction. As the implications settle in, we see further upside ahead.
Rotation from Tech to Industrials Signals Strength
Today's shift from tech stocks to industrials was in line with expectations and reflects a constructive development in equity markets. Capital is not exiting but rotating, which is healthy for sustained momentum. As industrial names gain traction, the liquidity exiting tech could reinforce strength in major indices, such as SPY and QQQ. While President Trump’s latest comments on tariffs introduced a brief headline risk, markets largely brushed them off. Broader sentiment remains risk-on for now.
Powell Holds Line as Political Tensions Cloud Rate Outlook
Fed Chair Jerome Powell kept markets guessing by refusing to promise a July rate cut, instead repeating a data-dependent stance while hinting that President Trump’s policies are partly to blame for lingering price pressures. Powell noted inflation has cooled but is still above target, the economy remains strong, and summer readings could run hotter. Although most FOMC members still expect at least one reduction in 2025, the schedule is fluid; we see little chance of a July move and view September as the earliest likely cut, with two cuts in total the most probable path for next year.
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The 1Konto Team
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