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Major US banks clear Fed's annual stress test | Bond traders expect Fed cuts will extend rally | Markets rally as US economy weathers tariff headwinds
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June 30, 2025
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The Bank for International Settlements has said the world economy faces heightened uncertainty due to trade fragmentation, rising debt, and geopolitical shocks. Outgoing BIS chief Agustin Carstens warned that public trust in institutions is fraying and called for urgent action to strengthen economic resilience.
Full Story: Reuters (6/29),  The Wall Street Journal (6/30),  Bloomberg (6/29) 
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The US Federal Reserve announced that all 22 major US banks passed its 2025 stress test, indicating they could withstand a hypothetical severe recession. This year's scenario was less severe than in 2024, reflecting shifts in global economic conditions and adjustments to the Fed's testing approach.
Full Story: The Associated Press (6/27),  American Banker (6/27) 
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Industry News and Trends
US bond traders are riding a three-week winning streak and expect more gains as rate-cut positions grow ahead of Thursday's jobs report. With Treasury yields near two-month lows and signs of a slowing economy, markets are pricing in up to two Fed cuts this year, despite internal divisions among policymakers.
Full Story: Bloomberg (6/30) 
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Despite fears of a downturn from tariffs and policy volatility, the US economy has remained resilient, with the S&P 500 hitting a record high and inflation staying milder than expected. Business investment and hiring have continued, though consumer spending and GDP growth have shown signs of softening.
Full Story: The Wall Street Journal (6/27) 
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Global M&A hit $2.14 trillion in the first half of 2025, driven by a surge in $10 billion-plus deals and record activity in Asia, despite headwinds from tariffs and high rates. Bankers see renewed optimism for H2 as volatility eases and U.S. policy shifts open the door to larger transactions.
Full Story: Reuters (6/29),  Finimize (6/30),  The Wall Street Journal (6/29) 
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Regulatory Roundup
The US Senate tax and spending bill passed a procedural hurdle in a 51-49 vote over the weekend, and the chamber could start a "vote-a-rama" on amendments to the package Monday morning. US President Donald Trump has indicated that he wants the bill on his desk by July 4.
Full Story: USA Today (6/29),  The Wall Street Journal (6/29),  Reuters (6/29),  Bloomberg (6/29) 
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Canada has withdrawn its digital services tax to restart stalled trade negotiations with the US, following threats of new tariffs from US President Trump. The two countries now aim to reach a deal by July 21, with Canada pledging to repeal the tax entirely.
Full Story: Bloomberg (6/30),  CBC News (Canada) (6/30),  Financial Times (6/30) 
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    This research note analyzes changes in interest rate derivatives (IRD) trading activity in the US, EU and UK from 2021 to 2024. It examines how central bank interest rate policies influenced IRD trading volumes and how the composition of IRD products has evolved due to the transition to alternative reference rates. Click here to read the report.
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    ISDA has published a new research paper that analyzes interest rate derivatives (IRD) trading activity reported in mainland China and Hong Kong. Click here to read the report.
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