One Big Beautiful Bill Act Heads to the Senate

Treasurys rebound after House passes Trump tax bill. After long-dated Treasury yields soared 30+ bps from late April, news that President Trump’s tax cut bill was passed by the House fueled a reversal. The long end of the yield curve dropped 5-8 bps today, signaling increased confidence in the U.S. despite expectations that the bill will materially increase the U.S. budget deficit. The belly of the curve fell too, with the 2-year yield down 3 bps to 3.99%. The 10-year and 30-year yield declined 7 bps to 4.53% and 5 bps to 5.04%, respectively.

Struggling US manufacturing sector gets a pleasant surprise. The manufacturing sector unexpectedly expanded in May, according to preliminary S&P Global US PMI data. The index climbed to 52.3, above the contraction/expansion 50.0 threshold, and above the 49.9 estimate. The sector’s expansion was largely fueled by stronger factory production, new order growth, and higher inventories. Chief Business Economist at S&P Global Market Intelligence, Chris Williamson, commented, “Business confidence has improved in May from the worrying slump seen in April, with gloom about prospects for the year ahead lifting somewhat thanks largely to the pause on higher rate tariffs.”

Embattled tax bill passes through House. Following contentious weeks of negotiations between the White House and GOP holdouts, the House ultimately voted in favor of the “One Big Beautiful Bill Act,” the President’s signature tax bill. The bill was narrowly passed in a 215-214 vote, with a single abstention, and it now faces the Senate before being enacted into law. Senate Majority Leader Thune said that the “Senate will have its imprint on it,” referring to the changes that will likely be made to the bill by senators, even though House Republicans wants as few changes made as possible. The bill will also have to overcome procedural obstacles in the Senate, and if changes are made to the version passed in the Senate, it may return to the House for another vote. Despite the challenges, Secretary Bessent said the chamber should vote by late July, but Senate Finance Chair Crapo didn’t commit to a timeline.