Daily Newsletter 7/3/25
House Republicans are pushing forward President Donald Trump’s ambitious tax cut and spending bill, gearing up for a crucial vote that could reshape fiscal policy and shake up market sentiment. After some last-minute negotiations and a few holdouts falling in line, the party is rallying to meet Trump’s goal of passing the legislation before the July 4th holiday.
The U.S. unemployment rate declined to 4.1% in June 2025, down from 4.2% in May, outperforming economists’ expectations of a rise to 4.3%. This unexpected improvement signals continued resilience in the labor market, with job creation also surpassing forecasts.
However, this stronger-than-expected jobs data also diminishes the probability of the Federal Reserve implementing interest rate cuts in the near future. Policymakers are likely to interpret the continued resilience in the labor market as a sign that the economy remains on solid footing, reducing the urgency to ease monetary policy. As a result, the Fed may choose to maintain its current cautious approach, keeping rates steady until there is clearer evidence of a slowdown or moderation in inflationary pressures.
For financial markets, this news sets the stage for a bit of a balancing act. On the bright side, stocks could get a boost as strong employment numbers usually mean people are spending, businesses are thriving, and profits are holding up well. That’s generally music to the ears of equity investors.
However, it’s not all smooth sailing. Bond markets might feel a little pressure, with yields likely to stay high—or even climb higher—as traders and investors dial back their hopes for quick interest rate cuts from the Fed. Higher yields also tend to make the U.S. dollar more attractive, potentially giving it a lift as global investors seek better returns.