The US Federal Reserve has proposed changes to stress tests for major banks, including averaging results over two years and giving banks an additional three months to adjust to capital requirements. The move aims to make the process more transparent and less volatile. Governor Michael Barr criticized the proposal, warning it could create a false sense of security, while Governor Adriana Kugler supported the plan but raised concerns about reduced responsiveness to current economic conditions. Public comments are due 60 days after publication in the Federal Register.
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US financial markets have stabilized following recent volatility triggered by President Donald Trump's trade policies. The S&P 500 and VIX Index have shown signs of recovery, and U.S. bonds have regained their safe-haven appeal. However, uncertainty remains due to Trump's critical comments about Federal Reserve Chair Jerome Powell and the possibility of further trade disruptions.
The dollar's safe-haven status is under scrutiny as it weakens amid President Donald Trump's trade policies. From April 2 to April 16, the S&P 500 fell 7%, while the WSJ Dollar Index dropped 4%. Investors are turning to alternative safe havens such as gold and the yen, both of which have risen significantly. The shift could have long-term implications for the US economy, particularly in financing fiscal deficits.
Banks are ramping up loans to nonbank lenders via their trading units, helping drive revenue at trading desks despite sluggish overall loan growth. This approach helps banks manage risk and free up capital for more profitable ventures. However, regional banks without trading operations face mounting pressure to maintain profitability.
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Treasury Secretary Scott Bessent is leading private meetings with the Federal Reserve and other banking agencies to streamline oversight and ease regulation. These efforts follow a February executive order from President Donald Trump aimed at tightening White House control over bank supervision. Bessent has emphasized coordination among regulators without consolidating agencies, but former Fed attorney Jeremy Kress has described the Treasury's actions as a "power grab" that could politicize financial regulation.
The Municipal Securities Rulemaking Board (MSRB) is considering a new stand-alone time-of-trade disclosure rule tailored specifically to municipal fund securities, such as 529 college savings plans and ABLE programs. The proposed rule aims to better reflect the unique characteristics of these pooled investment products, which differ from traditional municipal bonds. SIFMA voiced support for the idea, emphasizing that a separate rule could streamline disclosures and improve investor understanding.
Italian Prime Minister Giorgia Meloni and President Donald Trump expressed full confidence that the US will reach a trade agreement with the European Union before his 90-day tariff pause expires, as talks with major global economies accelerate. The two leaders also highlighted their alignment on energy and defense cooperation.
