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Frank Kelly’s Geopolitical Week Ahead | June 8, 2025

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6/8/2025

The G7 Leaders’ Summit convenes -- President Trump’s first trip to Canada since being re-elected and since he placed tough tariffs on the country.

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Francis (Frank) J. Kelly

Founder & Managing Partner, Fulcrum Macro Advisors LLC and Senior Political Strategist for DWS

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  • G7 Leaders’ Summit convenes
  • U.S. and Chinese trade negotiations begin yet again
  • Two big no-confidence votes are being held
  • U.S. Senate will continue to work on the One Big Beautiful Bill Act
  • Pope Leo’s first address to the U.S.
  • Global economic radar screen

U.S. Financial Regulatory Week Ahead

  • New Federal Reserve Vice Chair for Supervision outlining priorities
  • Senate Banking Committee offered up provisions to help pay for the Reconciliation bill
  • Treasury Secretary held a Financial Stability Oversight Council meeting
  • Conference on the history of bank supervision 

G7 Leaders’ Summit convenes
The big geopolitical event of the week is the Leaders’ Summit being held in Alberta, Canada.  This will be President Trump’s first trip to Canada since being re-elected and since he placed tough tariffs on the country.

The overall G7 agenda, as outlined by Canadian Prime Minister Mark Carney, is to focus on several broad themes – “protecting our communities and the world, building energy security and accelerating digital transition, and securing the partnerships of the future.” But the real focus will be trade and how to get to an endgame with the Trump tariff changes as well as discussing the opportunities and threats of artificial intelligence (AI).

But a lot of other major action will be taking place at the Summit including a possible meeting between Ukrainian President Volodymyr Zelensky and President Trump – the first meeting between the two leaders since their disastrous meeting at the White House on February 28th.  

U.S. and Chinese trade negotiations begin yet again
On Monday, US Secretary of Treasury Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Representative Jamison Greer will travel to London for talks with Chinese trade negotiators to try to and get trade talks back on track.  The meetings are the result of a telephone conversation between President Trump and Chinese President Xi Jinping this past week.  There had been a 90-day pause on Trump’s China tariffs but that quickly fell apart after the U.S. added new guidance on preventing Chinese semiconductor chips to be sold in the US.

Two big no-confidence votes are being held
Elsewhere this week, two big no-confidence votes are being held on Wednesday. 

  • Poland: The first in Poland on the heels of last week’s presidential elections.  The Polish Parliament is likely to hold a no-confidence vote on Prime Minister Donald Tusks government and there is a fairly good chance it will go through, forcing new parliamentary elections.
  • Israel: Meanwhile, Israel’s opposition parties will try to force a no-confidence vote in a bid to force new elections and push Prime Minister Benjamin Netanyahu from office. Current polling suggest Netanyahu would lose if elections were held today as many voters appear unhappy with the ongoing Gaza war. Additionally, two of Netanyahu’s coalition parties – both representing ultra-Orthodox voters – are threatening to withdraw their support unless there is a last-minute agreement giving an exemption to ultra-Orthodox men from military service.

U.S. Senate will continue to work on the One Big Beautiful Bill Act 
Back in Washington, the U.S. Senate will continue to work on the One Big Beautiful Bill Act (OBBA) – otherwise known as the Reconciliation bill – as a number of House Republican members who voted for the measure are now publicly expressing regret as the bill is now expected to add as much as $4 trillion to the federal deficit.  But the big news was Elon Musk’s extraordinary public spat with President Trump which began when Musk tweeted out his disgust with the size and shape of OBBA and then went on to criticize Trump – and even call for his impeachment – for supporting the bill in its current format.

We expect the U.S. Senate to move to change a number of market-sensitive provisions – including Section 899 which would allow Treasury to place retaliatory taxes on foreign companies as well as the state and local (SALT) provisions which the House raised to $40,000 but is facing a host of criticism from Republicans.

We continue to hold the view reaching a final deal on OBBA is going to take much longer than the Trump Administration is hoping for – July 4th is the stated goal – and is likely to be scaled back in order to get enough Republican support.

Two big events in the U.S.
And finally, this week will see two big events in the U.S. this Saturday:

President Trump’s birthday parade on Friday in Washington that will simultaneously celebrate the 250th anniversary of the U.S. Army. The parade will take place along Constitution Avenue in Washington.

The second big event will be in Chicago where newly elected Pope Leo XIV will address via video to a sold-out (40,000+) Rate Stadium (where the Holy Father’s beloved White Sox play).  This will be the Holy Father’s first official address to the United States.  

Global economic radar screen 
Looking at the global economic radar screen, the big events of the coming week are – aside from the G7 Meeting – China’s trade data and inflation figures and the U.S.’s May print.

The U.S.

  • CPI is out on Wednesday and is out on Friday – both of which will be an important indicator for how the Federal Reserve may move during the meeting the following week and the overall impact of the Trump tariffs since .
  • Also, out in the U.S. this week is the University of Michigan June consumer sentiment survey on Friday.
  • There are no Fed speeches this week as the Fed has gone into their “Blackout Period” in advance of the FOMC meeting.

In Europe, UK Chancellor Rachel Reeves will be delivering the Spending Review to Parliament on Wednesday, revealing the spending priorities of Prime Minister Starmer’s government.  It will include plans for spending more than £600 billion on public services – 1/5 of the total British economy.

In the EU this week, there are a large number of European Central Bank speeches including European Central Bank (ECB) President Christine Lagarde speaking in Beijing.  Germany reports May and data, too.

Bringing it back to Asia, Japan releases the May Economy Watchers Survey on Monday and the PPI on Wednesday.   But markets are mostly focused on China’s inflation and trade figure releases on Monday to get a sense how deeply the Trump tariffs have impacted the economy

U.S. Financial Regulatory Week Ahead


New Federal Reserve Vice Chair for Supervision outlining priorities

The big news of the week is Michelle Bowman was confirmed Wednesday by the U.S. Senate as the new Federal Reserve Vice Chair for Supervision. Bowman, a former community banker, wasted no time, giving her first speech Friday outlining her priorities in a speech entitled “Taking a Fresh Look at Supervision and Regulation.”  Bowman made clear in the speech she is deeply focused on encouraging regulatory tailoring, undertaking a strategic reevaluation of bank capital requirements, reviewing a host of regulations and rules passed in the last administration by her predecessor, and streamlining the review process for bank mergers and de novo applications.

Senate Banking Committee offered up provisions to help pay for the Reconciliation bill 
Meanwhile, there has been and will be this coming week a lot of action in Congress. This past Wednesday, the Senate Banking Committee offered up a number of provisions in a bid to help pay for H.R. 1, The One Big Beautiful Bill Act (OBBBA) – otherwise known as the Reconciliation bill.  But what the committee provided – totally a little over $1 billion in possible budget savings – may not pass muster with the Senate Parliamentarian as it appears a number of the provisions do not meet the strict rules for what can be included in a Reconciliation bill.  

What Senate Banking offer includes:

  • Changing the Federal Reserve employees’ pay scale;
  • Zeroing out the entire budget of the Consumer Financial Protection Bureau (CFPB);
  • Dissolving the Public Company Accounting Oversight Board (PCAOB) and folding its functions into the SEC; and
  • Getting rid of the Treasury Department’s Office of Financial Research.  

We will likely know in the coming week what the Parliamentarian decides. 

This coming week

  • The Senate Agriculture Committee finally hold a confirmation hearing for Brian Quintenz to serve as Chair of the Commodities Futures Trading Commission (CFTC). Quintenz was nominated months ago but for a variety of reasons his confirmation hearing was held up.
  • Treasury Secretary Scott Bessent and Housing and Urban Development Secretary Scott Turner will testify before the Senate Appropriations Committee on Thursday on their respective department’s 2026 budget requests.
  • The House Financial Services Committee will hold a mark-up hearing for eight pieces of legislation, mainly focused on securities regulation. Committee Chair Representative French Hill (R – AR) has been wanting to move on his recently introduced crypto market structure bill and we believe he will likely seek a mark-up on that bill the week after next.

Treasury Secretary Scott Bessent held a Financial Stability Oversight Council meeting 
Finally, we would note that this past Wednesday, Treasury Secretary Scott Bessent held a Financial Stability Oversight Council (FSOC) meeting (we cannot find any notice of the meeting being sent around beforehand).  According to the readout of the meeting:

“Council members heard updates from the Board of Governors of the Federal Reserve System, the , and the Office of the Comptroller of the Currency (OCC) on their efforts to enhance their supervisory and regulatory frameworks and to focus bank supervision on material financial risks.  Members also discussed their continued collaboration to facilitate support for economic growth by banks and other financial institutions.

Additionally, the Council received a briefing by Treasury staff on the work of the President’s Working Group on Digital Asset Markets.  The Chairman of the and the Acting Chairman of the Commodity Futures Trading Commission also provided updates on their agencies’ recent actions.  The speakers discussed ongoing efforts to promote U.S. leadership in digital assets and financial technology and to provide greater regulatory clarity and certainty to digital asset markets.

The Council also received a presentation from FDIC, OCC, and Federal Housing Finance Agency staff on commercial real estate (CRE).  The presentation noted stabilization across CRE sectors despite some continued headwinds in the office and multifamily segments.  It also described actions taken by supervisors to mitigate CRE risks at their regulated institutions in recent years.

In addition, the Council heard an update by Treasury, SEC, and Office of Financial Research staff on market developments related to corporate credit, including the continued growth of private credit.  The presentation noted that corporate fundamentals remain solid, although firms with lower credit ratings, higher leverage, and a greater share of floating-rate liabilities are more exposed to potential challenges.  Council members discussed ways in which private credit can promote investment and access to capital, as well as potential vulnerabilities that warrant continued monitoring.”

Conference on the history of bank supervision 
Finally, we note that the Brookings Institution is holding a day-long conference on the history of bank supervision in the U.S., “The History of Bank Supervision in America and the Road Ahead.”  There are a number of excellent scholars and former regulators speaking and it should be quite interesting.

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Francis (Frank) J. Kelly

Frank is the Founder and Managing Partner of Fulcrum Macro Advisors LLC, a political risk advisory firm based in Washington, DC. He is the senior political strategist for DWS.

banner image of Frank Kelly