BBB

Daily update

US President Trump labelled the budget proposal trying to pass Congress a “Big Beautiful Bill.” BBB might be an unfortunate alliteration given concerns about the US credit rating. The details of the budget are constantly changing, so their effects are hard to judge, but the broad impact is to push the US further along a rising debt path. Bond investors are less than happy.
Economically quite a lot of the budget is extending existing tax cuts, which does not add to growth. Removing taxes on tips might push inflation higher than reported. If employers reduce pay (included in consumer price data via prices) and encourage tipping (not included in consumer price data), the cost of living will rise more than reported inflation.
There is quite a lot of central bank noise. The account of the last ECB meeting is due—markets are very comfortable with the easing path, but comments on economic uncertainty are of interest. There are three Bank of England speakers, at a time when policy outlooks are very divided. The three Federal Reserve speakers are unlikely to offer conviction in a world of uncertainty.
Assorted business sentiment polls clutter the data calendar, but are not going to improve investors’ understanding of the economy very much.