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US equity futures crept higher in Asia as the July 9 trade deadline looms and Capitol Hill’s legislative sausage factory kicks into high gear. Trump’s $4.5 trillion tax cut beast is still roaming, and markets—never ones to sit on their hands—are already pricing not just two Fed cuts this year, but a full-blown easing cycle stretching deep into 2026. Powell may still hold the gavel, but traders are betting the next Fed chair walks, talks, and cuts like a dove in MAGA red.

Risk appetite got juiced by a cocktail only a stock trader could love: oil's collapse, soft macro data, and Trump tossing elbows at the Fed. Markets aren’t just front-running Powell—they’re clearing the runway and forcing the liftoff. With inflation easing and job market cracks creeping into the narrative like termites in the floorboards, July is back on the menu.

Meanwhile, Wall Street’s pulling a full Teflon Don—nothing sticks. Data misses, fiscal blowouts, political gridlock—the tape just shrugs and climbs. US stocks closed at fresh all-time highs Friday, treating Washington’s chaos like elevator music in a bull market lobby. Investors jumped on Bessent’s Labour Day “trade deals” tease like it was a surprise upside revision to GDP—animal spirits are back, and they’re running on policy jet fuel.

The tax cut bill is set to grind toward a Monday vote. CBO says it’ll balloon the deficit by $3.3 trillion, but the market’s chasing AI-fueled productivity, not budget lectures. If the tech renaissance delivers even half the magic traders have already priced in, GDP a decade out will leave the CBO looking like they were forecasting with a Ouija board. Fighting over future deficits while markets price a supply-side boom is like arguing about seatbelts on a rocket ship.

And here’s the pivot—animal spirits aren’t theory anymore, they’re policy fuel. Between deregulation chatter, trade deals, AI advancements, and Treasury curve adjustments (hello, short-dated issuance), the shift is underway—from cautious gridlock to a calculated roadmap. It’s messy, sure, but sometimes you need a little chaos to kickstart corporate capex.

The market’s moved: short the buck, long duration, and chase anything tethered to AI growth. With 10s drifting toward 4.1%, the setup’s clear—yields lower, curves flatter, and policy in play. The fire is lit. Whether Washington stokes it or smothers it with a fresh round of tariffs is the only thing left to price.

Oil, meanwhile, is back in the doghouse. Brent has given up the geopolitical risk premium and is trading near pre-Israel Strike on Tehran levels as funds front-run a possible 411,000 bpd OPEC+ production hike. And of course, if Trump surprises and reactivates his tariff machine, expect demand expectations to wobble alongside supply excess.

Markets are sprinting ahead of the Fed, dollar bears are back in control, and duration is finally seen to be the hedge of choice. Risk is riding high, but sentiment is fickle. The rally has legs, but data will take precedence this week, so circle Thursday’s NFP as the Report Moves to July 3 Due to the Holiday.
 

The View

From Spotlight to Ensemble: The Market Finds Its Depth Chart

For the first time in what feels like forever, the summer rally isn’t just riding shotgun with big tech—it’s starting to drive with both hands on the wheel. The tape’s showing actual breadth: financials, industrials, even the long-forgotten utilities are showing signs of life. For once, it’s not just a Magnificent Seven magic show; the bench is finally playing.

Market breadth measures are perking up like it’s pre-election Q3 all over again. Stocks above their 50-day moving average are climbing. Advancers are starting to outnumber decliners. It’s not exactly 2013, but it's enough to suggest we might be entering the “everyone gets a trophy” phase of the cycle. The kind where traders who missed the AI rocket look around and ask, “what else hasn’t gone up yet?”

This is the part of the rally where the FOMO crowd stops chasing semis and starts discovering regional banks and steel stocks—because “cheap” starts to sound smarter than “crowded.” Even the rates narrative is shifting. A July cut is suddenly back on the table, and if the Fed plays ball, the laggards might finally catch a bid.

Defence stocks are grinding higher. Domestic banks are drawing interest. And small-caps? Still asleep—but with a whiff of a rate cut and tariff repricing, they might just stir. There's no risk-on explosion yet, but the kindling is piling up.

And while tech's not going anywhere—AI optimism is still coursing through the veins of every terminal on Wall Street—valuations are finally catching up to gravity. When the megacaps start pricing like luxury goods, traders eventually wander into the discount aisle. And it’s not just portfolio theory—it’s positioning. If you're already long the usual suspects, the asymmetry is now in the names nobody's touched for 18 months.

This isn't a sector rotation—it’s more like a market rediscovery. The momentum tourists are starting to diversify. Not because they want to—but because they have to. Leadership fatigue is a thing, and rich multiples have a way of waking even the laziest allocators.

Bottom line? If this rally continues to broaden, it will feed on itself. Risk gets repriced, cash on the sidelines gets redeployed, and suddenly the same market that felt top-heavy now appears to have legs.

Is it sustainable? That depends on the next landmine—Middle East, tariffs, Fed missteps—you name it. However, price action suggests that the market is currently willing to believe in a larger rally. And for the first time this year, it's not just tech whispering that story—it’s the whole room talking.

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