Good morning. U.S. stocks edged lower Thursday, snapping a string of melt-ups as the House passed the Trump administration’s sweeping tax and spending bill by a single vote. Interest rate sensitive sectors lagged as Treasury yields spiked, while Bitcoin broke out to fresh highs. Despite the market cooling slightly, sentiment continues to shift from extreme bearishness to increasing optimism, with investors digesting the ramifications of added fiscal stimulus. Meanwhile, volatility and bond yields remain elevated as traders weigh the tax plan’s long-term impact on inflation, deficits, and interest rates.

Looking ahead, today brings data on new home sales and a speech from Fed Governor Lisa Cook, which may offer further clues into the Fed’s policy outlook. Next week, investor focus will turn to the Senate’s version of the tax bill, with any proposed revisions likely to move rates and risk assets alike.

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Markets slipped modestly on Thursday following the House’s 215-214 passage of the tax-and-spending bill. Communication and consumer discretionary stocks led gains, while utilities and health care underperformed. The 10-year Treasury yield jumped to 4.63% in early trade before retreating to 4.54% by the close. Yields rose sharply in early trading following Wednesday’s weak 20-year bond auction and the CBO’s updated deficit estimates. Meanwhile, jobless claims fell to 227,000, beating estimates, while continued claims ticked up to 1.9 million.

On the economic front, preliminary S&P Global PMI data showed surprising strength in both services and manufacturing, with both indexes rising to 52.3 — well above consensus forecasts. These readings reflect continued momentum in economic activity despite recent trade friction and rate volatility. However, the Chicago Fed’s National Activity Index dropped to -0.25, its worst showing since October, reinforcing the mixed nature of the macro backdrop.

In international markets, Europe finished lower, weighed by the eurozone services PMI unexpectedly slipping into contraction territory at 48.9. Asian equities were mixed as markets absorbed China’s latest lending rate cuts. In commodities, WTI crude oil fell 0.6% to $61.20 per barrel, and gold dropped 0.55% to $3,295/oz as the U.S. dollar rebounded. Bitcoin surged past $112,000 to new all-time highs before paring gains late in the session. Treasury yields closed lower after morning highs, with the 10-year settling at 4.54% and the 30-year at 5.00%.

Markets continue to be driven by fiscal headlines, yield volatility, and the ripple effects of U.S.-China trade and taxation policy. While investor sentiment has improved materially, the surge in Treasury yields and bond market jitters suggest caution. With the Senate likely to rework the tax package and more economic data ahead, expect further swings in both risk and rate markets.