{"id":23292,"date":"2025-07-03T14:27:14","date_gmt":"2025-07-03T14:27:14","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=23292"},"modified":"2025-07-03T14:27:14","modified_gmt":"2025-07-03T14:27:14","slug":"how-the-one-big-beautiful-bill-act-is-moving-the-markets","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.com\/en-eu\/opinion\/how-the-one-big-beautiful-bill-act-is-moving-the-markets\/","title":{"rendered":"How the One Big Beautiful Bill Act is moving the markets"},"content":{"rendered":"\n
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The One Big Beautiful Bill Act (OBBBA), passed by the US Congress in mid-2025, is reshaping the global financial landscape. For traders, the implications stretch far beyond US borders.<\/p>\n\n\n\n

This sweeping budget and tax legislation is already fuelling volatility across key asset classes such as forex, indices, commodities, and crypto.<\/p>\n\n\n\n

As market reactions intensify, it’s crucial for traders to understand what’s driving these moves, where the risks lie, and how to navigate the changing environment.<\/p>\n\n\n\n

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What is the One Big Beautiful Bill Act?<\/strong><\/h2>\n\n\n\n

The OBBBA is a major US fiscal package with wide-ranging economic and geopolitical implications. It increases the US deficit by $2.4 to $2.8 trillion over the next decade, extending corporate and individual tax cuts, capping deductions, and expanding domestic energy production.<\/p>\n\n\n\n

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One of its most controversial components is Section 899<\/strong>, which targets foreign investors from jurisdictions the US considers to have \u201cdiscriminatory\u201d tax practices \u2013 such as the EU, Canada, and Australia.<\/p>\n\n\n\n

These countries impose digital services taxes on US tech firms, prompting Washington to retaliate with punitive tax treatment. The result is rising trade tensions and growing uncertainty among international investors, many of whom hold large volumes of US assets.<\/p>\n\n\n\n

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As of 3 July, the OBBBA has passed the Senate in a significantly revised form, but House Republicans are struggling to gather enough votes for approval. Internal divisions \u2013 especially among fiscal conservatives \u2013 and weather-related absences are jeopardising the 4 July deadline.<\/p>\n\n\n\n

If the House fails to pass the Senate version, the bill could stall, despite mounting pressure from party leadership to secure a legislative win before Independence Day.<\/p>\n\n\n\n

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Forex: Dollar weakness and policy tensions<\/strong><\/h2>\n\n\n\n

The OBBBA\u2019s aggressive deficit expansion has already taken a toll on the US dollar. The greenback dropped 10.7% in the first half of 2025 \u2013 its steepest semi-annual fall since 1991. This reflects fears of long-term fiscal instability and rising inflation risks.<\/p>\n\n\n\n

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Currency pairs like EUR\/USD<\/strong>, USD\/CAD<\/strong>, and AUD\/USD<\/strong> have become particularly sensitive to policy news. In April 2025 alone, net foreign outflows from US markets reached $14.2 billion, signalling waning overseas demand.<\/p>\n\n\n\n

Section 899 has compounded this pressure by straining relations with key trading partners, triggering retaliatory threats and undermining confidence in US assets.<\/p>\n\n\n\n

For forex traders, these dynamics translate into heightened volatility, sharper price swings, and a need to monitor both economic indicators and geopolitical developments closely.<\/p>\n\n\n\n

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Indices: Gains from tax cuts, risks from investor pullback<\/strong><\/h2>\n\n\n\n

While the OBBBA\u2019s tax relief measures \u2013 especially the permanent 21% corporate tax rate \u2013 have boosted US business sentiment, the benefits for equity markets come with caveats.<\/p>\n\n\n\n

The S&P 500<\/strong> and Nasdaq<\/strong> reached record highs in June 2025, fuelled by strong earnings expectations and fiscal stimulus. However, foreign investors \u2013 who collectively hold nearly $19 trillion in US equities \u2013 are becoming more cautious.<\/p>\n\n\n\n

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Section 899 introduces new friction in capital flows, with some funds reducing exposure to US assets amid tax and trade risks.<\/p>\n\n\n\n

The Tax Foundation estimates a modest GDP boost of 0.8% to 1.1% from the Act\u2019s pro-growth policies, but warns that retaliatory trade measures could shave off nearly 0.8% of GDP. In this context, index traders must weigh short-term optimism against long-term fragility.<\/p>\n\n\n\n

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Commodities: Gold rising on deficit fears, oil steady on US output<\/strong><\/h2>\n\n\n\n

Among commodities, gold<\/strong> and oil<\/strong> are at the centre of the market\u2019s reaction to the OBBBA.<\/p>\n\n\n\n

Gold has surged as a classic safe haven amid fears about US fiscal sustainability. With bond markets flashing signs of distress and confidence in Treasuries declining, gold prices hit $2,500 per ounce in June 2025 \u2013 a historic high.<\/p>\n\n\n\n

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Traders are watching for further gains if inflation accelerates or global risk sentiment worsens.<\/p>\n\n\n\n

Oil, by contrast, has remained relatively stable. The Act\u2019s energy provisions allow for expanded drilling on federal land and incentivise domestic production.<\/p>\n\n\n\n

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As a result, WTI crude is holding near $70 per barrel, supported by output growth that offsets concerns about global demand.<\/p>\n\n\n\n

For traders, the divergence between these two assets highlights how fiscal and supply-side factors are playing out differently across commodity classes.<\/p>\n\n\n\n

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Crypto: Gaining on dollar weakness, sensitive to market sentiment<\/strong><\/h2>\n\n\n\n

Cryptocurrencies \u2013 especially Bitcoin<\/strong> \u2013 have benefitted from dollar weakness and investor scepticism about traditional finance.<\/p>\n\n\n\n

BTC crossed the $90,000 mark in Q2 2025, buoyed by a mix of inflation hedging, global diversification, and retail enthusiasm.<\/p>\n\n\n\n

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Still, crypto markets remain highly exposed to changes in risk appetite. If global equities face a sharp sell-off \u2013 particularly driven by Section 899-related fears \u2013 crypto could face liquidation pressure.<\/p>\n\n\n\n

Moreover, central bank policies and liquidity trends will continue to influence digital asset prices.<\/p>\n\n\n\n

As such, crypto traders need to keep one eye on the macroeconomic landscape and the other on regulatory developments.<\/p>\n\n\n\n

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Strategy guide: How traders can stay ahead<\/strong><\/h2>\n\n\n\n

In a complex, policy-driven market, a few principles can help traders make better decisions:<\/p>\n\n\n\n