Senate, House Advance Very Different SEC, IRS Spending Bills

House Republicans support blocking the SEC’s market structure proposals, but Senate Democrats do not.



The Senate Appropriations Committee advanced a spending bill by unanimous vote Thursday to fund the IRS, SEC, and financial services and government agencies, including specific outlays for SECURE 2.0-mandated regulations.

The Senate bill differs significantly from the spending bill advanced by the House Appropriations Committee on Thursday. That bill is largely the same as the bill that passed the Financial Services and General Government Subcommittee in June.

Among the differences, the House bill completely revokes the approximately $80 billion in additional funding provided to the IRS by the Inflation Reduction Act over the next 10 years, while the Senate bill only cuts $10 billion. The Senate version is consistent with the debt ceiling budget deal reached in late May by President Joe Biden and House Speaker Kevin McCarthy, R-California.

The House bill also blocks several regulatory proposals from the Securities and Exchange Commission. These proposals would include: climate risk and greenhouse gas disclosure; swing pricing for mutual funds; the safeguarding proposal; mandatory auctions for retail orders (the order competition Rule); Regulation Best Execution; and the update to stock price increments. These measures are absent in the Senate version.

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The SEC and IRS would also receive cuts from their 2023 levels for fiscal 2024 under the House bill. The SEC’s budget would be cut by $170 million down to $2 billion, and the IRS by $1.1 billion down to $11.25 billion, in each case specifically targeting the enforcement budget. The IRS cuts come in addition to cutting the $80 billion in additional Inflation Reduction Act funding. The Senate bill appropriates $2.4 billion to the SEC.

The Senate version appropriates $1.884 billion to the Department of the Treasury, excluding the IRS, and the House version appropriates $1.793 billion.

The Senate spending bill appropriates $14 million to the Department of Labor so it can construct the “Lost and Found” database of retirement accounts, as mandated by the SECURE 2.0 Act of 2022. This provision is absent from the House version.

The two competing bills also have very different views on telework. Federal teleworking is a frequent complaint among Congressional Republicans and the House bill demands federal agencies to return to pre-pandemic levels of office workers. The Senate bill on the other hand, instructs the SEC, FCC, and FTC to report the impact of telework on recruitment, retention, and performance to Congress.

The two bills will have to be reconciled before being passed in each legislative chamber, then sent to Biden for his signature or veto.

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What Will Fed’s Reaction Be to Sharp Inflation Fall?

No additional rate hikes, one more, two more? Strategists ponder what comes next after the CPI news.



The dramatic fall in the inflation rate has provoked a range of strategists’ expectations for the next move in the Federal Reserve’s tightening campaign. The Consumer Price Index decelerated to a 3.0% annual rate in June, a fall of a full percentage point from the May reading, according to the U.S. Bureau of Labor Statistics.

Fed policymakers meet July 25 to 26, having previously forecasted that two more increases lie ahead for the Fed’s benchmark rate, which now is in a band ranging from 5.0% to 5.25%.

The stock and bond markets are behaving like the end is near for rate hikes. Following Wednesday’s news, the S&P 500 popped up 0.74%, and Treasury yields dropped. The two-year slipped to 4.72% from 4.88%, and the 10-year to 3.86% from 3.99%.

In fact, Bryce Doty, senior portfolio manager at Sit Investment Associates, predicted that the yield curve will flatten: “The inverted yield curve had become more of an indication the inflation relief was coming than anything else.”

The panoply of what comes next from the Fed was wide among strategists. No more hikes are needed, in the eyes of Jon Maier, CIO at exchange-traded fund issuer Global X ETFs. The CPI development, he declared, “makes a strong case against additional rate hikes. The Fed, which had potentially planned two more hikes this year, might reassess its strategy.”

The rate boosts likely are over, agreed Alexandra Wilson-Elizondo, deputy CIO of multi asset solutions at Goldman Sachs Asset Management, saying, “after this print, the Fed very well may be done.” She reasoned that “it is enough on a standalone basis for the market to put in question the Fed’s dot projections of two additional hikes.”

A single rate raise this month and then no more is likely to be the Fed’s reaction, per Bill Adams, chief economist for Comerica Bank—although he cautioned that unexpected occurrences such as a wage growth spike could provoke a second one later this year.

To Ian Shepherdson, chief economist at Pantheon Macroeconomics, any new rate increases would be overkill, but the Fed will tighten one more time in July. “Our base case remains that the hike later this month will be the last in the cycle,” he wrote. Still, “it will also be a mistake; the Fed does not need to hike again.”

Economic factors can be fickle, however, warned Adam Hetts, global head of the multi-asset team at Janus Henderson Investors, adding that lower inflation may not be assured and that prices could escalate again. Hetts advised investors to beware of “a potentially stop-and-go series of economic readings in the back half of this year.”

Brian Coulton, chief economist at Fitch Ratings, agreed that any optimism about rates was premature, pointing to the CPI report’s reading that still-high core inflation has persisted, referring to price movements without food (which has continued to ascend) and energy (nudging up in June after a May decline). “Core inflation remains just under 5% on both a year-on-year and three-month annualized basis, which is far too high,” he indicated.

With no clear consensus, what the Fed does in two weeks, and how it explains its stance, whatever that may be, will be the subject of intense debate.

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