Insights 
VT 
Trump’s fiscal monster just set the markets on fire. Stocks are flying, but the dollar’s bleeding, and the bond market’s bracing for impact.
On paper, the bill stretches across nearly every corner of the American economy, from defence budgets and energy subsidies to healthcare eligibility and estate taxes. But buried within its policy sprawl are targeted amendments and revisions that will shape how traders, corporations, and consumers engage with the U.S. economy for the foreseeable future.
The Price of It All
At the heart of the legislation is a delicate balancing act between stimulus and debt expansion. The Congressional Budget Office projects the bill will reduce tax revenues by $4.5 trillion while cutting federal spending by $1.1–1.2 trillion. That leaves a $3.4 trillion gap, which will be added to the national debt over the next decade. To avoid a short-term default, the debt ceiling has been raised by $5 trillion—buying time, but raising long-term concerns.
Among the last-minute amendments were some sharp turns in regulatory philosophy. A controversial provision that would have blocked state-level regulation of artificial intelligence for ten years was rejected almost unanimously—99 to 1 in the Senate. Section 899, a retaliatory tax aimed at foreign traders, was also eliminated after backlash from financial institutions.
Still, plenty of incentives remain. The estate tax exemption now stands at $15 million for individuals and $30 million for couples, both indexed to inflation. The SALT (State and Local Tax) deduction rises to $40,000 annually for the next five years, a boon for residents of high-tax states. Meanwhile, the 20 percent qualified business income deduction for pass-through entities becomes permanent from 2026—a lifeline for small enterprises that reinvest in domestic operations
These amendments are already rippling through market behaviour. The S&P 500 surged to fresh record highs in early July, driven in part by renewed optimism in sectors directly lifted by the bill: defence, fossil fuels, manufacturing, and small business. A $150 billion boost to military and border spending has reignited demand across aerospace and homeland security infrastructure, while traditional energy sectors benefit from preserved tax breaks and increased access to federal land.
Winners at the Table, Losers in the Dust
Manufacturers, especially in the auto sector, now enjoy permanent full expensing for capital investment and R&D, alongside a reintroduced car loan interest deduction. This aligns with Trump’s broader push for industrial self-sufficiency—a message likely to resonate with domestic producers as well as institutional traders seeking earnings momentum.
In the short term, some economists estimate the bill could boost GDP growth by up to 0.5% in 2026, with corporate earnings expected to reflect this fiscal tailwind as early as the next few quarters. But there are risks simmering beneath the surface.
Bond yields have already spiked, reflecting investor anxiety over swelling Treasury issuance. Higher long-term rates could drag on rate-sensitive sectors like real estate, utilities, and consumer credit. In particular, mortgage rates are expected to climb, applying pressure to housing demand and squeezing profit margins for developers and lenders alike.
The real estate sector, once a beneficiary of pandemic-era stimulus, now finds itself under renewed scrutiny.
Electric vehicle makers face a more direct blow. The repeal of federal EV purchase credits removes a key financial incentive for consumers.
With affordability already strained by elevated input costs and battery supply challenges, EV adoption may cool, especially among middle-income buyers. Combined with rising borrowing costs, this could slow innovation pipelines and delay expansion plans.
Healthcare providers, too, face turbulent waters. Medicaid cuts and stricter work requirements may reduce coverage among vulnerable populations, tightening reimbursement streams and adding bureaucratic burdens. The ripple effects could touch everything from hospital operating margins to insurer profitability forecasts.
Even higher education institutions aren’t spared. The bill levies new taxes on large university endowments, targeting institutions with high per-student investment income. This threatens capital projects, scholarship funding, and research spending—at a time when universities are already contending with declining enrolment and donor fatigue.
Dollar on the Defensive
As markets digest the sector-level impacts, attention turns to the broader currency landscape. The U.S. dollar index slipped further following the bill’s passage, marking a continuation of its multi-month decline. Foreign traders—particularly in Asia and the Middle East—are growing more cautious. The rising deficit, combined with the absence of a clear fiscal roadmap, raises concerns about inflation and long-term capital allocation.
BlackRock’s recent commentary underscores this unease. If global demand for U.S. bonds begins to weaken, the dollar could face protracted headwinds. Even if the Federal Reserve delays rate cuts to stem outflows, inflationary dynamics and capital crowding could erode investor confidence in U.S. financial instruments. Without a coherent debt management strategy from the White House, the currency may struggle to find sustained support over the next 12 to 24 months.
Caution is warranted. While the One Big Beautiful Bill has injected a fiscal jolt into key segments of the economy, it has also opened the door to longer-term vulnerabilities. Elevated Treasury yields are already testing investor patience, and the fate of the dollar now hinges on whether future economic gains can outpace the growing debt burden.
In the near term, equity markets may continue climbing as corporate profits benefit from lower taxes and defence-heavy spending. But the sustainability of this rally depends on how quickly interest rates normalise, whether bond buyers stay engaged, and whether sectors like renewables and healthcare can adapt to a changed landscape. traders should keep one eye on earnings— and the other on Washington’s balance sheet.
Key Movements of the Week
It has been a tense, coiled week across the charts. The market’s attention, already rattled by Washington’s fiscal overdrive, is now laser-focused on the expiry of the U.S. tariff moratorium. Traders are reading price action like tea leaves—watching every candle for a clue, every support zone for a reaction, every breakout for signs of overextension.
The US Dollar Index (USDX) remains in a coiling pattern. Price continues to consolidate, showing neither conviction from bulls nor bears. The next pivot is clear: 97.25. If price climbs and stalls there, it sets the stage for a reversal. But if it pushes past and closes decisively above, then all eyes will shift higher—to 97.70, where another key resistance awaits. Until then, it’s a market in limbo.
Across the Atlantic, EURUSD has crept upward from the 1.1720 zone, but the bulls don’t seem confident. Momentum is thin, and hesitation reigns. Should the pair slide further, traders will be waiting around 1.1700 for a bounce. If price closes strongly below that level, the next test drops to 1.1660—a key floor that could either hold the line or give way to deeper losses.
GBPUSD is playing a similar game. The pair is caught in a tight range, consolidating as traders brace for Friday’s UK GDP print. If the pound slips, the 1.3520 area becomes the first line of defence. If that fails, 1.3415 is next in line—a level with history, where buyers are likely to make themselves known.
In the East, USDJPY began retracing just shy of the monitored 145.50 area. If selling intensifies, bullish price action is expected around 143.85 and 143.60. Both zones are strong historical reaction points—deep enough to attract buyers but close enough to remain in the current trend’s orbit.
USDCHF continues to edge lower, and buyers are watching the 0.7915 level for potential re-entry. If the pair turns upward instead, the 0.8050 region becomes the next key decision point. With the Swiss franc’s sensitivity to global uncertainty, volatility around these levels could intensify without warning.
AUDUSD is locked in a consolidation pattern, hovering just below recent highs. Should price dip further, traders are watching 0.6515 for a bullish reaction. The Reserve Bank of Australia’s next rate call looms—and with it, potential fireworks.
In New Zealand, NZDUSD bounced off the 0.6045 support zone but did so without much conviction. Bulls haven’t committed. If price rolls over again, the 0.6015 and 0.6000 zones are the next lines of interest—psychological levels where buyers may take a stronger stance.
USDCAD is drifting upward, approaching the 1.3650 area. Traders are on alert for bearish signals here, as the pair nears exhaustion. If the previous 1.35393 swing low is taken out after that, it would confirm momentum is fading—and hint at deeper retracements to come.
Commodities are faring no better under the spotlight. USOil (WTI) is slipping from recent highs. If it starts consolidating again, traders are watching for bearish reactions around 71.80 and 73.40. If those levels hold, a decline toward 63.35 or even 61.00 is possible. That slide would be steep—and consequential for inflation forecasts.
Gold is surging again, now approaching the 3350 resistance. If price stalls there and reverses, the 3300 level becomes key for bulls seeking re-entry. With real yields in flux and inflation chatter back on desks, gold may be setting up for another move—but the range is getting tighter.
Over in equities, the S&P 500 continues to ride a wave of bullish momentum, but cracks are beginning to form. With the U.S. tariff moratorium nearing expiry, some traders expect a retracement. If it climbs, 6400 and 6630 are the next resistance zones—both heavy with confluence, both ready to test the strength of the rally. Caution is warranted.
Bitcoin dropped hard from the 109,650 monitored level. It’s still bleeding. The next support is at 105,700, where traders expect a bullish reaction—at least temporarily. Crypto markets are jittery, and sentiment could turn quickly, especially if macro risks mount.
Natural gas has been particularly fragile. NG pulled back sharply from the 3.45 area. The immediate question is whether it can rebound to break above 3.75—or if it collapses further toward the 2.869 swing low. The current trend leans bearish, and price action this week has done little to inspire confidence.
Another chart for NG confirms it: buyers remain muted. If price drops again, watch the 3.09 area. A breakdown below that could trigger a steep slide, shaking out remaining longs.
Across the board, this is a market stretched thin. Charts are teetering near breakout and breakdown zones. Traders aren’t chasing highs blindly—but they aren’t selling in panic either. The sense is that something’s coming. The kind of week where tight stop-losses and clear discipline matter most.
Key Events of the Week
As we close out the week, the market’s pulse is now tied to three major events that could set the tone.
On Tuesday, July 8, the Reserve Bank of Australia’s cash rate decision is expected to set the tone for AUD pairs. Markets are pricing in a cut to 3.60% from the previous 3.85%, with expectations leaning toward a downward consolidation in AUDUSD early in the week. The signal is clear: traders are preparing for weaker Aussie momentum unless the RBA surprises with a more hawkish tone or a hold.
Wednesday, July 9, brings a double-header. The Reserve Bank of New Zealand is forecast to hold rates steady at 3.25%, and traders are advised to refer to price structure rather than assume a breakout either way. Volatility could spike regardless, especially if forward guidance hints at economic softness or fiscal drag.
Wednesday also marks the end of the 90-day tariff reprieve for the U.S. This is the sleeper event of the week. If the U.S. fails to reach terms with major trading partners like the EU or Japan, traders could see fresh weakness in the US Dollar Index (USDX). Price may drift lower even before the deadline, pricing in the uncertainty—and if tensions escalate, it could tip major pairs into breakout zones.
Friday closes the week with a crucial UK GDP print. Monthly GDP is forecast to remain sluggish, following a prior reading of –0.3%, and cable (GBPUSD) will likely test structural levels if this contraction holds. Traders should brace for whipsaws if the figure deviates significantly from expectations.
