Trump’s ‘big, beautiful’ bill deepens investor worries

Today’s agenda: Israeli embassy staff killed in Washington; Telegram’s first annual profit; Nestlé CEO interview; Burkina Faso’s anti-west icon; and has Starlink already won the space race?

Good morning. We begin with the market fallout as Donald Trump moves closer to passing a sweeping budget bill that would extend tax cuts and increase the US federal debt. Here’s what you need to know.

Market reaction: US government bonds and stocks fell. The 30-year Treasury yield reached its highest level since late 2023 in evening trading in New York, extending a multi-day rise. The S&P 500 dropped 1.6 per cent, with more than 95 per cent of its member stocks ending the day lower. Financials, real estate and healthcare were the benchmark index’s worst-performing sectors, while a sell-off in Big Tech added to the decline. Bond prices recovered slightly during Asia trading this morning, while futures for the S&P 500 and Nasdaq edged higher.

Why this is happening: Investors are worried about the US fiscal outlook. The bill is expected to add at least $3tn to the national debt over the next decade. Their fears were also reflected in a weak $16bn auction of 20-year Treasuries, which were sold at their highest interest rate since 2020. Primary dealers — banks required to buy any unsold bonds — purchased 16.9 per cent of the offering, above the average of 15.1 per cent. One analyst noted: “Markets really have no appetite for duration here.” Read the full story.

• Explainer: Here’s what Trump’s “big, beautiful” bill means for the US economy and the president’s political agenda.

• The FT View: In its current form, the bill’s economic consequences risk being far uglier than Trump portrays, writes our editorial board.

For more from Capitol Hill, sign up for our White House Watch newsletter. Here’s what else we’re keeping tabs on today:

• Economic data: The Eurozone, UK, US, France and Germany issue manufacturing and services purchasing managers’ indices, while the UK reports public sector finances and the European Central Bank releases minutes from its most recent rate-setting meeting.

• Chagos Islands: The UK could sign a controversial deal to hand over the territory to Mauritius as soon as today.

• Brussels Economic Forum: The EU’s economy commissioner and chief executives of Renault and Electrolux are among those set to speak.

• Companies: Johnson Matthey could announce the sale of its catalyst unit to Honeywell in a £1.8bn all-cash deal at its results today. BT and easyJet also report.

Join us for a subscriber-only webinar next Wednesday for insights into the most consequential geopolitical rivalry of our time: the US-China showdown. Register now and put questions to our panel.

Five more top stories

1. Two Israeli embassy staff members were shot and killed in Washington outside an event at the Jewish museum in the US capital late yesterday. Homeland security secretary Kristi Noem said her department was investigating and vowed to “bring this depraved perpetrator to justice”. More on this developing story here.

2. The EU is offering to extend tariff-free access for American lobsters to entice Trump into a broader trade deal. A 2020 agreement to eliminate levies on the shellfish expires on July 31, but the bloc’s officials say it could be extended as part of a package to remove the US president’s recent tariffs. Andy Bounds has more details from Brussels.

3. Trump attacked South Africa’s President Cyril Ramaphosa over his country’s alleged mistreatment of white farmers at a televised White House meeting yesterday. Trump at one point took the unprecedented step of projecting videos on to screens on the wall of the Oval Office purporting to show the persecution of white farmers. Here are more details from the meeting.

• Opinion: South Africa’s white minority does have justified anxieties, writes Alec Russell, but many are thriving and it is absurd to talk of a “genocide”.

• Qatari jet: The Pentagon has formally accepted the $400mn luxury jumbo jet to be used as the US president’s plane, despite bipartisan concerns about ethics and security.

4. Exclusive: Telegram leapt to a $540mn profit last year, as the messaging app achieved rapid growth despite the ongoing French legal proceedings against its founder Pavel Durov. The Dubai-based group told investors it went from a $173mn loss in 2023 to its first annual profit, according to a company presentation seen by the Financial Times.

5. Exclusive: The UK has discussed using new legislation to wipe out British Steel’s debts of close to £1bn, which some in government believe could ease a sale of the business, according to Whitehall figures. The controversial move to erase money owed to Chinese owner Jingye could damage business confidence in the UK and exacerbate tensions with Beijing.

News in-depth

Since taking power in a 2022 coup, Burkina Faso’s Ibrahim Traoré has launched anti-corruption drives, sought to wrest greater control of his country’s mineral riches from global mining companies and realign away from former colonial ruler France and towards Russia. How did an obscure military officer become an anti-western icon on the continent?

We’re also reading . . . 

• Nestlé: CEO Laurent Freixe told the FT that his predecessor “weakened the fabric of the organisation” by diversifying into new products.

• US market: Investors are asking “what next” as the fever over American exceptionalism breaks, writes Katie Martin.

• UK housing: Unless you’re willing to move further afield, you might be stuck in your existing home for longer than you expect, writes Neal Hudson.

• Eurostar’s rivals: Financing, regulation and different rail systems mean potential competitors are years away from launching services.

Chart of the day

With more than 7,000 operational satellites circling the Earth, Starlink is by far the dominant force in the industry. While Amazon and rivals from China and Europe are trying to catch up, has Elon Musk’s company already won the new global space race?

Take a break from the news

What distinguishes the finest airport lounges? Frequent flyer Andrew Jones has criss-crossed the world to find the answer. Sweeping architecture, shoeshines and “a sense of the journey that awaits you” are some of the things to look out for.