Main by morning: 'crypto week' tugs, trading boom at US banks

Internal contradictions in the Republican Party make it difficult to advance key legislative crypto initiatives, despite the active support of the industry and the personal intervention of Donald Trump. The American president also once again returned to one of his favorite topics: the possible firing of Federal Reserve chief Jerome Powell. US banks, meanwhile, are facing a trading boom. About these and other topics - in our review of key events for the morning of July 17.

The future of three bills to regulate cryptocurrencies came into question Wednesday after two days of resistance from conservative Republicans in the House of Representatives, reports CNBC. Republicans opposed last-minute changes made to meet the demands of a group of ultraconservatives whose "no" votes blocked Tuesday's vote.

Their resistance delayed the bill's passage for 10 hours. Late Wednesday night, a group of lawmakers did change their position and voted in favor, allowing the House of Representatives to approve the rules of procedure for debating cryptocurrency bills and the accompanying appropriations package for the Pentagon.

Wednesday's vote was the longest open vote in modern House history - the previous record vote was earlier this month.

Despite the overnight approval of the regulations, the two-day stalemate raised doubts about whether the House Republican conference could unite its members' disparate views on crypto regulation to pass final versions of legislation to be signed into law by the president.

For the crypto industry, which donated tens of millions of dollars to House members in the last election, the difficulty in advancing these laws was a major blow, dashing hopes of passing the long-awaited regulatory framework during the so-called crypto week.

Donald Trump has once again demonstrated his ability to influence global financial markets. This time, by returning to one of his favorite topics: the possible firing of Federal Reserve Chairman Jerome Powell, Writes Bloomberg.

Panic briefly gripped markets on Wednesday, reminiscent of the aftermath of Trump's trade wars that began in April, with US stocks, the dollar and long-term bonds sagging sharply after sources said the US president is likely to oust Powell soon.

At the same time, quotations of short-term Treasury bonds rose amid speculation that the new head of the Fed, appointed by Trump, will be more malleable and agree to lower interest rates. However, less than an hour later, all market moves were reversed after Trump himself downplayed the likelihood of a firing, saying he had "no plans" to remove Powell from his post - despite regular public rebukes against him for being "slow".

Nevertheless, the message from the markets was clear. For many, the initial reaction reflected a deep-seated concern that Trump might decide to do what has long seemed unthinkable - fire Powell and thereby undermine the Fed's monetary policy independence, which in turn could lead to higher inflation.

"The markets see this as a real threat," said Joe Gilbert, an asset manager at Integrity Asset Management. - That's troubling. It's not yet clear if this was a tentative move on Trump's part to gauge the markets' reaction to Powell's potential firing. We believe the legal hurdles to removing him will prove too high."

Wall Street expected Donald Trump's second term to lead to a flurry of deals and mergers. Instead, banks got a trading boom, writes Bloomberg.

Trading income of the five largest U.S. banks in the first half of the year increased by $10 billion compared to last year and reached a record level. Activity in the equity, currency and bond markets increased significantly amid tariff policy and tax changes. Meanwhile, investment banking revenues grew less than $1 billion and remain nearly 40% below their 2021 peak, as the same volatility that fueled trading hampered deals and companies going public.

"We saw sharp volatility in the markets after Liberation Day," said Bank of America Global Markets President Jim Demaree. - There was high client activity, then as fears subsided a bit, the market stabilized. This was followed by a rotation of capital between equities, interest rate assets and currencies.

When Trump won the election in November, Wall Street financiers expected his pro-economic agenda to revitalize the deal market after a lull. JPMorgan Chase CEO Jamie Dimon said at the time that bankers were literally "dancing in the streets," anticipating the return of the market's "animal spirits." However, Trump's aggressive tariff measures have cooled those expectations, causing market turbulence and reduced M&A activity.

Nevertheless, the volatility caused by April's "Emancipation Day" triggered a flurry of trading activity in the second quarter that brought record earnings for Wall Street's biggest players. Bank of America traders had a record second quarter, while Goldman Sachs had the largest stock trading profit in Wall Street history. Morgan Stanley had its best second quarter for stocks, and Citigroup had its best result in five years. Citi CEO Jane Fraser said that volatility is now "not a bug, but a feature of the new world order".

Total trading revenue for the top five banks reached $71 billion in the first half of the year, an all-time record. According to BofA's DeMare, activity will remain strong, albeit not as strong as it was immediately after the duties were announced.

Trump has said he will send letters to more than 150 countries notifying them that the new duty rates could be 10% or 15%, continuing to pursue his trade agenda, writes Bloomberg. 

"For everyone in that group, the terms will be the same," Trump told reporters at the White House, clarifying that most of the letter recipients are "small countries that don't do a lot of business with the United States."

Later, in an interview with Real America's Voice, Trump clarified that the rate would be "probably 10 or 15%, we haven't decided yet."

Trump has ramped up his rhetoric on trade duties in recent days, announcing new levies that will go into effect on August 1 unless countries agree on terms more favorable to the U.S. The mailing of the letters effectively extends the original July 9 deadline by another three weeks, which has prompted a rush by partner countries seeking to avoid the new duties.

"For much of the world - and especially Asia, where duties have been among the highest - the announcement can be seen as positive, as it provides certainty and suggests a rate lower than previously thought," said Alicia Garcia Herrero, Natixis' chief economist for the APAC region. She said it also signals that "Trump understands: too high duties are destabilizing."

Asia-Pacific markets opened on Wednesday with mixed dynamics.

- As of 8:11 a.m. Singapore time (8:11 p.m. U.S. Eastern time), Japan's Nikkei 225 index was down 0.6 percent, while the broader Topix index was down 0.1 percent.

- In South Korea, the Kospi index fell 0.3 percent, while the Kosdaq, which focuses on small companies, was unchanged.

- In Australia, the S&P/ASX 200 index added 0.4 percent.

- U.S. stock futures declined at the beginning of the Asian session amid reports of Trump's intention to fire Jerome Powell. Futures on the S&P 500 index lost 0.17%, futures on the Nasdaq 100 and on the Dow Jones Industrial Average fell by 0.18%.

This article was AI-translated and verified by a human editor