Big, Beautiful Tax Bill

Daily Updates:

• President Trump’s “big, beautiful” tax bill passed through the House with a slim majority yesterday (215 votes in favour and 214 against), and will now be heading to the Senate. The bill plans to extend Trump’s 2017 tax cuts and increase the US debt ceiling by $4T, among a slew of other initiatives. 
• Trump said on his social media platform Truth Social yesterday that his bill is “the most significant piece of Legislation that will ever be signed in the History of our Country!”

‍

• The independent bipartisan Committee for a Responsible Federal Budget has said Trump’s tax bill will cost more than $3T over the next decade – that projected increase in fiscal spending comes only a week after credit agency Moody’s Ratings downgraded US debt, citing that “this one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns”.

‍

• US equities failed to recover some of their losses yesterday, finishing lower for a third consecutive day, despite a slight reprieve in US treasury yields. 
• The yield on the 10Y treasury fell from a high of 4.62% on Wednesday to 4.53% yesterday, while the 30Y yield fell from 5.14% to 5.0%. 

‍

• BTC’s divergence away from US equities continued – over the past 5 days, the S&P 500 is down -1.47%, while BTC is up 4.15%. Currently trading at $110.8K, the largest cryptocurrency has rallied 47% from its April lows of $75K.
• A drop in implied volatility at the front-end of the term structure over the past 24 hours now means the range of at-the-money implied volatility has widened to 41-50% for BTC, while a similar drop in front-end vols for ETH has flattened its term structure further. 
• Volatility smile skews remains undeniably bullish for both assets: the 14-day tenor for BTC is skewed towards OTM calls by 4.9%, while the 7-day tenor for ETH assigns a near 8% premium for call options.  That sentiment is also evident in the futures curve, as the 1-week tenor yield (currently 12%) is close to its highest levels all month. 

‍

• Federal Reserve Governor Christopher Waller said there is a chance the Fed could resume its cutting cycle (which has been put on pause so far this year) if the Trump administration’s tariffs on US trading partners settle closer to 10%.
• Speaking on Fox Business, Waller claimed “if we can get the tariffs down closer to 10% and then that’s all sealed, done and delivered somewhere by July” then the Fed is in “a good position to kind of move with rate cuts through the second half of the year”. 
• Waller caveated that tone however stating that if the administration reverts back to the higher Liberation Day level of tariffs, it would “have much bigger impacts on inflation and put more of a handcuff on us to do anything with short-term rates”. 
• When asked about President Trump’s tax bill and the potential driver of the selloff in US treasuries, Waller responded that players in the financial markets he had spoken to “thought it [Trump’s tax bill] was going to be much more in terms of fiscal restraint, and they’re not necessarily seeing it”.
  
  
• The SEC once again has postponed its decision on CoinShares’ proposed XRP and Litecoin ETFs, originally due by May 26, 2025. The new deadline is set for August 24, 2025, with the final decision deadline set for October 18 and 19.
• This follows earlier delays announced this week for XRP ETF filings by Grayscale, 21Shares, and Bitwise.
• Second deadlines are also approaching for XRP ETF filings – Bitwise on May 25, Canary on May 26, and WisdomTree on May 27. 

‍

• The SEC has also officially acknowledged Canary Capital’s filing for a Staked TRX ETF, which would offer TRX spot price exposure along with additional staking rewards for investors by staking on to TRON to earn a yield.

‍

• The biggest decentralised exchange aggregator (DEX) on Sui, Cetus, was exploited via its smart contracts, resulting in a theft of approximately $223M. Several Sui-based tokens crashed due to the exploit as prices were skewed and the protocol’s liquidity pools were drained.
• In response to the attack, Cetus have paused its smart contract functionality and Sui validators are ignoring transactions on the identified addresses with stolen funds.
  

This Week’s Calendar:

Charts of the Day:

‍