Tax Bill Narrowly Clears House, Markets Split on Outlook

Market Recap

After three consecutive days of losses, the U.S. Dollar Index rebounded on Thursday, briefly climbing above the 100 level before retreating to close at 99.93, up 0.32%. The greenbacks strength prompted profit-taking in gold, which had earlier surged to a two-week high of $3,345.38 per ounce during the Asian session. However, spot gold prices tumbled more than $65, falling below the key $3,300 level and closing down 0.64% at $3,294.51. Spot silver also declined, ending the session 1.07% lower at $33.02 per ounce.

What to Watch

● Trumps Tax Bill Barely Passes the House—Senate Fight Looms

The House passed the sweeping tax reform package by a razor-thin 215-214 vote. The bill, spanning over 1,000 pages, underwent dozens of last-minute revisions just days before the vote—highlighting the difficulty Republican leadership faces in unifying the party. Several GOP senators have already signaled they will demand significant amendments before offering their support. Democrats warned that backing the bill could cost many Republicans their seats in the upcoming midterm elections.

● Japans 30-Year Bond Slump Raises Alarms for U.S. Treasuries

Analysts are concerned that structural imbalances in supply and demand have turned Japanese government bonds into a “value trap.” Even after currency hedging, JGBs offer relatively attractive yields, which could steepen the U.S. Treasury yield curve further. The collapse in JGBs may be a canary in the coal mine for broader structural issues in global bond markets, which are currently under triple pressure: persistent inflation, declining demand from ALM investors, and surging government funding needs.

Key Data to Watch

• 20:30 GMT+8 – Canada March Retail Sales (MoM)

• 22:00 GMT+8 – U.S. April New Home Sales (Annualized)

• Overnight:

• 00:00 GMT+8 – Fed Governor Lisa Cook speaks on “Financial Stability” in an online forum

• 01:00 GMT+8 – U.S. Baker Hughes Oil Rig Count (Week Ending May 23)