🚦JUST IN: Powell appearance as Bessent calls for Fed review

• Markets in the red as risks start to grow.

• UK borrowing points towards further tax hikes.

• Powell appearance as Bessent calls for Fed review.

European markets are in the red today as traders increasingly gear up for a two-week period that will likely see risk of sentiment build as we approached the 1 August tariff deadline. Coming hot off the heels of record eyes in US indices, the justification for such pricing will increasingly come into question in the absence of any significant breakthrough in trade negotiations.

For Europe, the insistence that the EU stands ready to retaliate with a €21 billion package of counter measures will do little to improve sentiment. Whilst the economic data has largely been relatively upbeat over recent weeks, it is likely that the worst is yet to come if we see Trump’s tariffs surge at the end of the month.

One positive implication of the tariff policies has been the income generated through the current import taxes, with the rise of the dollar and falling yields partly linked with the billions of fresh income levied towards paying off the debt.

The latest public sector net borrowing figures paint a troubling picture for the UK’s fiscal outlook. Borrowing surged to £20.7 billion in June 2025—£6.6 billion higher than forecast—driven in large part by a sharp increase in debt interest payments, which hit £16.4 billion due to inflation-linked bonds.

This reinforces earlier Bank of England warnings about the long-term risks inflation poses to public finances. For Chancellor Rachel Reeves, the data signals a serious credibility test: her Budget assumptions relied on economic growth, yet GDP shrank by 0.1% in May, undercutting tax revenues just as spending pressures rise.

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(This story was corrected on July 22 at 09:30 GMT to change the headline as it originally misspelled the name of US Treasury Secretary Scott Bessent.)