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The biggest U.S. banks have passed the Federal Reserve’s annual tests of whether they can withstand a future economic and market crisis, with firms maintaining robust capital levels even after suffering hundreds of billions of dollars in losses. The results of the U.S. central bank's yearly "stress test" of large lenders' finances found they remain resilient in the face of a potential recession, a spike in unemployment, and market turmoil. “Large banks remain well capitalized and resilient to a range of severe outcomes,” said Michelle Bowman, the Fed’s vice-chair for supervision. "The stress tests have proven that most banks have more than twice the reserve capital required, so there is evidence that they could use this to spur loan growth," observed Brian Mulberry, portfolio manager at Zacks Investment Management, which holds banking stocks. "Considering that the U.S. consumer is still strong and the stress test supports their healthy positions, we could see the banks pull some of the capital back and channel it into lending."

 

Financial Times

Reuters

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The General Services Administration (GSA) wrote to EY, McKinsey, BCG, FTI Consulting, AlixPartners, and A&M on Thursday, asking them to outline and justify their federal contracts. The GSA helps oversee procurement across the government and is coordinating the administration-wide review to determine which tasks can be done internally by federal employees, and which must be done by outside consultants. “Our objective is to critically evaluate which engagements deliver genuine value,” wrote the GSA’s Josh Gruenbaum, who serves as commissioner of the Federal Acquisition Service. “In keeping with this Administration’s laser focus on fiscal responsibility, our baseline presumption is that most, if not all, of these contracted services are not core to agency missions.” He asked the consulting firms to respond by July 11 by detailing their existing federal contracts in plain language - “no consultant gobbledygook,” he said in the letter - and explaining the pricing structure of projects.

 

Wall Street Journal

Global dealmaking in the first half of the year fell to a two-decade low as tariffs, high interest rates, a choppy market and uncertainty around the Trump administration’s policies stalled a rebound in M&A activity. Financial data company Mergermarket has reported that the worldwide tally of mergers, acquisitions, divestitures, financings and joint ventures so far in 2025 is down 16% year-over-year at 16,663, its lowest level since 2005. “Corporates were just in wait-and-see mode,” Mergermarket executive editor Lucinda Guthrie said, adding: “This uncertainty around where the [tariff] levels would land and where the deals would be struck caused shockwaves at different points in the calendar.” Kevin Desai, head of PwC’s U.S. deals platform, added: “All of us in the industry thought 2025 was going to be this banner year, with a meaningful uptick in volume . . . Obviously, that hasn’t come to fruition.”

 

Wall Street Journal

The Financial Action Task Force (FATF) has urged countries to enhance their efforts to regulate cryptocurrency to combat illicit finance, highlighting that only 40 out of 138 jurisdictions are "largely compliant" with its standards. The FATF's report also raises concerns about the increasing use of stablecoins in illegal activities, noting that illicit crypto wallet addresses may have received up to $51bn in 2024, which the FATF says poses significant risks to the global financial system.

 

Reuters

Agustín Carstens, general manager of the Bank for International Settlements, has warned that the global economy is at a "pivotal moment" as it enters a "new era of heightened uncertainty and unpredictability." This, he said, is testing public trust in institutions such as central banks. Mr Carstens, the former governor of Mexico's central bank, said increasing protectionism and trade fragmentation is "particular concerning" as they were exacerbating a decline in economic and productivity growth. He also voiced concern over evidence that the world economy is becoming less resilient to shocks. Pointing to rising debt levels, Mr Carstens said: "This trend cannot continue."

 

Reuters

First-quarter gross domestic product (GDP) growth was revised lower Thursday in light of reduced consumer spending. The Commerce Department said that GDP contracted by 0.5% on an annualized basis, 0.3 point lower than an earlier reading. Economists surveyed by LSEG had expected the economy to contract at a 0.2% rate in the quarter. Imports surged 37.9% in the first quarter and accounted for a contraction of 4.66% in GDP, as firms ramped up imports in an effort to minimize the impact of President Donald Trump's tariffs. Government spending was down 0.6% compared with the prior quarter, with a decline of 4.6% in federal spending partially offset by a 2% gain by state and local governments. Consumer spending, meanwhile, rose 0.5%, while disposable personal income grew 2.5%. "The decline in Q1 GDP was a touch more than previously thought, but the details are more troubling because of the downward revision to real final sales to domestic purchasers, the engine of the economy," said Ryan Sweet, chief U.S. economist at Oxford Economics.

 

The Hill

Fox News

Los Angeles Times

U.S. consumer spending declined in May by the most since the start of the year, the Commerce Department reported on Friday. The personal consumption expenditures price index fell 0.3% after adjusting for inflation. Excluding food and energy, it rose 0.2%. Spending on transportation services, meals out and accommodation, financial services, and other services, a category that includes net foreign travel, all fell last month. Personal income, meanwhile, fell in May by the most since 2021 on a pullback in government transfers, led by a decrease in Social Security payments. The saving rate fell to 4.5%. Wages climbed 0.4% for a second month, extending a recent run of solid increases. “This morning’s news was consistent with other reports showing the economy gradually losing momentum in the second quarter, ahead of the brunt of tariff increases expected to wash ashore during the summer and early fall,” said Gary Schlossberg, market strategist at the Wells Fargo Investment Institute.

 

Bloomberg

CNBC

The U.S. trade deficit in goods increased in May amid a decline in exports, according to the Commerce Department, widening 11.1% to $96.6bn. The figure was larger than the $86.1bn median estimate in a Bloomberg survey of economists. Goods exports were down $9.7bn to $179.2bn, while goods imports were little changed at $275.8bn. 

 

Bloomberg

Reuters

Billionaire Elon Musk has slammed the latest version of President Donald Trump's tax and spending bill released by the U.S. Senate, describing it as "utterly insane and destructive." Musk wrote in a post on X: "The latest Senate draft bill will destroy millions of jobs in America and cause immense strategic harm to our country! . . . It gives handouts to industries of the past while severely damaging industries of the future."

 

U.S. News

Hawaiian Airlines has reported a disruption to some of its IT systems due to a cyber attack, although it confirmed that flights are operating as scheduled. The airline described the incident as a "cybersecurity event," a phrase which is often associated with ransomware attacks, but did not disclose specific details about the nature of the breach.

 

Reuters

A series of experiments involving more than 4,500 participants at the University of Pennsylvania’s Wharton School found that those who used ChatGPT and other large language models (LLMs) to research everyday topics demonstrated weaker understanding of those topics afterward and produced less original insights than people who looked up the same topics using Google. Overall, across five experiments, ChatGPT-assisted brainstorming sessions consistently produced narrower sets of ideas, according to the researchers. The findings highlight how overly relying on gen AI “can limit the breadth of perspectives, even when individual ideas seem original,” a media release stated. Relatedly, a study from researchers at MIT’s Media Lab divided 54 subjects - 18 to 39 year-olds from the Boston area - into three groups, and asked them to write several SAT essays using OpenAI’s ChatGPT, Google’s search engine, and nothing at all, respectively. Researchers used an EEG to record the writers’ brain activity across 32 regions, and found that of the three groups, ChatGPT users had the lowest brain engagement and “consistently underperformed at neural, linguistic, and behavioral levels.” Over the course of several months, ChatGPT users got lazier with each subsequent essay, often resorting to copy-and-paste by the end of the study.

 

Time

HR Dive

Wall Street Journal

The Trump administration is preparing a series of executive orders aimed at enhancing energy supply to support the growth of artificial intelligence in the U.S., amidst technological competition with China. These measures may include streamlining grid connections for power projects and providing federal land for data centres, with an AI Action Plan set to be unveiled on July 23 to further promote the industry.

 

Reuters

The Three Mile Island nuclear plant in Pennsylvania is set to restart in 2027, a year earlier than anticipated, following a deal with Microsoft to supply power for its data centers. Constellation Energy, the plant's owner, is expediting the process to connect to the regional grid, reflecting a renewed interest in nuclear power amid rising electricity demand in the U.S.

 

Reuters