- Macro Monday
- Posts
- Who Pays The (Big, Beautiful) Bill?
Who Pays The (Big, Beautiful) Bill?
The Macro Institute's Weekly Economic Primer
The Macro Institute
May 27, 2025
In partnership with
The last week of the month tends to sneak in a few data gems, and this week is no exception. We’ll be watching the usual regional suspects: Dallas, Richmond, and Chicago Fed PMIs are all on deck. Friday also brings some solid macro data points with PCE and Personal Income.
But the real story is on Tuesday when we get both the FHFA Home Price Index and the Case-Shiller Index. Both are leading indicators with serious implications. Home prices lead rent inflation with a long lag, so these are important.
In a world where tariffs are pushing inflation higher, rent inflation could be an unexpected counterbalance. If you're looking for where disinflation might come from next, these housing indicators could be the clue.
Bottom line: Tuesday’s housing data matters more than usual!
The Macro Week In Review
Smarter Investing Starts with Smarter News
Cut through the hype and get the market insights that matter. The Daily Upside delivers clear, actionable financial analysis trusted by over 1 million investors—free, every morning. Whether you’re buying your first ETF or managing a diversified portfolio, this is the edge your inbox has been missing.
The Macro Week Ahead
📜 Big, Beautiful Bill
Never a dull week. Wednesday’s weak treasury auction and Thursday’s release of details on the “Big, Beautiful Bill” pushed the 10-Year to 4.6%. Further out on the curve, the yield on the 30-Year has risen from 4.4% on Liberation Day to 5.1%. The most recent reading represents the highest yield on the long end since 2007. Globally, there is a similar trend with developed market yields in the UK, France, Italy, and Japan moving significantly higher over the last week.
We believe the recent move in U.S. yields partially reflects the complete turn on fiscal policy. Just six months ago, Treasury Secretary Bessent announced the “3-3-3 Plan” was the strategic goal for the White House. 3% average GDP Growth, 3% annual budget deficit, and 3M barrels/day of U.S. domestic oil production. Coupled with expenditure reductions from DOGE and revenues from tariffs, it seemed the U.S. fiscal side was heading in a more sustainable direction. Thursday’s passage of the House bill threw cold water on any notions of spending restraint, as forecasts call for the deficit to expand to 7% in the near term and another $5 trillion in additional long-term debt. Extension and expansion of the prior Trump tax cuts are the most expensive line item.
The unrestrained spending of the U.S. fiscal authority results in more debt issuance and higher inflation. Investors in U.S. bonds require higher nominal yields to offset these factors. While the U.S. has been on this path of fiscal decay for some time, its current tango with the deficit is of particular concern now given the economy is near peak employment. It seems that the White House is currently planning to outrun the deficit through pro-growth tax policies.
💼 Last Week's Data
While fiscal policy dominated the macro-sphere last week, it was one pretty light on consequential data points. Initial Jobless Claims for the week suggested the labor market remains relatively healthy.
The Manufacturing PMI for the month of May (preliminary) did surprise to the upside with New Orders at 52.4. According to S&P Global Chief Economist Chris Williamson, “Business confidence has improved in May from the worrying slump seen in April, with gloom about prospects for the year ahead lifting somewhat thanks largely to the pause on higher rate tariffs. Current output growth has also picked up from April’s recent low, which had seen the weakest rise for over one-and-a-half years, in response to an upturn in demand.”
☀️ A Short Week Ahead
Tuesday, we’ll be paying close attention to the Conference Board’s consumer survey for May as a comparison of what we saw from the University of Michigan. Michigan suggests that consumers are expecting high single digit inflation this year and a rapidly deteriorating labor market. Conference Board’s April survey was just as bearish with Consumer Confidence at 86, which is in line with lows from the pandemic and the anticipation of a 7% increase in inflation.
We’ll get more insight into May trends from the regional PMIs with Dallas on Tuesday, Richmond on Wednesday, and Chicago on Friday. The headline demand numbers may see some reprieve from the April doldrums of triple-digit tariff rates. We’re likely to see echoes of S&P’s survey here too where customers are building inventory ahead of July.
The NY Fed Global Supply Chain pressure index curiously sits at long term average levels, and we’ll be curious to see how the stop-start pattern of goods flowing from East to West over the last few months impacts availability and shipping rates.
Macro Job Board
Seeking a highly motivated Cross-Asset Macro Strategist to join our fast-paced and dynamic team. This is a sell-side research role designed to support the Chief Market Strategist (CMS) in delivering cutting-edge research and actionable investment strategy across multiple asset classes.
Expected to monitor, gather, and analyze macroeconomic and financial markets data. Will assist senior analysts in idea generation and the production of KBRA Strategist research reports, presentation slides, and decks.
This candidate will closely monitor political and policy developments
and assist economists to publish timely and innovative research on macroeconomic, political, and policy developments and their economic impact. They will also work on economic research projects and publications.