Reconciliation Bill Showdown Intensifies Amid Trump-Musk Feud

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TL;DR:

• Reconciliation Bill markets show a 73.5% chance of passage by July 31 and 86% by August 31, as the Trump-Musk feud fuels volatility.
• Odds favor ending taxes on tips at 80% and extending high-earner tax cuts at 88%, but CBO warns of a $2.4T deficit surge over 10 years.
• The bill’s front-loaded tax relief could boost short-term growth but risks long-term fiscal drag, potentially leaving 10.9M uninsured by 2034, per Bloomberg
• Limitless markets show rising odds for a $61.5B-$80B Anthropic valuation, reflecting AI sector momentum amid recent raises by OpenAI ($40B) and xAI ($6B)
• Anthropic’s valuation shifts may foreshadow movements in related AI markets, offering early insights for hedge funds and tech investors.

Market Snapshots

• Will the reconciliation bill be passed by July 31? 73.5% chance
• Will the reconciliation bill be passed by August 31? 86% chance
• Will the next reconciliation bill be passed before July? 12% chance
• Will the next reconciliation bill be passed on or after September 1? 16% chance
• Will the next reconciliation bill end taxes on tips in 2025? 80% chance
• Will the next reconciliation bill extend the income tax cut for high earners in 2025? 88% chance
• Will the next reconciliation bill reduce taxes on Social Security in 2025? 10% chance
• Will the next reconciliation bill lift the debt ceiling in 2025? 80% chance
• Will the next reconciliation bill end electric vehicle tax credits in 2025? 94% chance
• 💠 Will Anthropic’s next round valuation exceed $200B? 8% chance

Event Breakdown

This week, the US Reconciliation Bill, dubbed Trump’s “Big Beautiful Bill,” faces a dramatic Senate showdown, compounded by a high-profile clash between President Trump and Elon Musk. The bill, narrowly passed by the House, now hinges on Senate approval amid heated debate, with prediction markets reflecting heightened uncertainty around its timeline and contents. Recent developments, including Musk’s public opposition and a scheduled Friday call to broker peace, signal critical stakes for the US economy and stakeholders like macro funds, data journalists, and think tanks.

The bill’s passage timeline has shifted notably. As of the time of this writing, Polymarket data shows a 73.5% chance of passage by July 31, down from 86.0% a week ago, and an 86.0% chance by August 31, slightly up from 80.0%.

This dip in early passage odds follows Musk’s vocal criticism, including threats to decommission SpaceX’s Dragon spacecraft, which may have rattled market confidence. Granular markets further highlight the tension: the chance of passage before July has plummeted from 38% to 12% over the last seven days, while odds for passage later in the summer have increased, suggesting a potential late summer resolution if the feud delays momentum.

The Trump-Musk spat centers on the bill’s fiscal impact. Musk opposes the $5 trillion debt ceiling hike and a projected $2.4 trillion deficit increase over 10 years, per the CBO, clashing with Trump’s claims of a $1.6 trillion expense cut and the “biggest tax cut ever.” Markets reflect this divide: the odds of ending taxes on tips in 2025 dropped to 78% from 88% over the past week, while lifting the debt ceiling fell to 80% from 97%. Musk’s call to “drop the tax cuts” and “cut the pork” aligns with Senator Rand Paul’s stance, potentially influencing Senate negotiations.

For macro funds, this uncertainty could drive volatility in bond yields and the dollar, especially if the bill’s passage stalls or its deficit impact grows. Here are probabilities concerning both “how high” and “how low” Treasury yields will get in 2025:

Data journalists can frame this as a narrative of political infighting versus fiscal policy, using market odds to quantify the stakes. Think tanks might model scenarios where Musk’s influence sways spending cuts, altering the bill’s $1.25 trillion in back-loaded reductions post-2029. The feud’s resolution, pending the Friday call, could pivot markets—potentially easing deficit fears if cuts are secured, or deepening them if tax cuts dominate.

The economic fallout remains stark. The CBO’s $2.4 trillion deficit estimate, against Trump’s $1.6 trillion cut claim, underscores a fiscal tug-of-war that could boost short-term growth but burden future administrations with debt costs. With 10.9 million potentially losing health insurance by 2034, per Bloomberg, state budgets face added strain. As the Senate debates unfold, these market shifts offer real-time signals, turning a political drama into a quantitative edge for navigating the bill’s uncertain path.

Related markets & forecasts:

• Who will vote for the next budget reconciliation bill in the Senate?
• When will the Senate pass a reconciliation bill?
• When will a budget reconciliation bill become law?
• Will the reconciliation bill be scored relative to a current policy baseline?
• How many people will lose health care because of the reconciliation bill?
• How many votes will the next reconciliation bill get in the Senate?

Long-Tail Radar

This week’s Long-tail Radar zeroes in on a unique market from Limitless’s decentralized exchange, the “Anthropic next round valuation?” market, a niche yet intriguing barometer with a current volume of $13K. This long-tail market tracks the potential valuation range for Anthropic’s upcoming funding round, offering a window into the opaque world of private tech company valuations. 

Since its inception, the market has shown dynamic shifts, with the “No funding round” probability starting high but trending downward, while the “$80B - $61.5B” range has climbed steadily. Over the last 14 days, “No funding round” odds have dipped a few points, while the “$80B - $61.5B” segment has risen, reflecting growing trader confidence in a significant raise.

The market’s movements gain context against recent AI funding trends. OpenAI’s $40B raise in March at a $300B valuation, xAI’s $6B haul in December at $40B, Perplexity’s $500M talks targeting $14B, and Cursor’s $900M raise in May at $9B signal a robust appetite for AI investments. Despite this, the “No funding round” odds remain elevated, suggesting potential overpricing given the sector’s momentum. This divergence hints at early signals for traders and forecasters, as private valuations—critical yet elusive metrics—shape venture capital and crypto investment strategies.

These markets hold substantial value for diverse stakeholders. Hedge funds can glean early investment signals, positioning bets on AI-driven growth stocks or derivatives tied to tech valuations. Consultants modeling risks can use these odds to advise clients on portfolio diversification, while companies that rely on these LLMs daily can anticipate how to optimize their operations. The “Anthropic next round valuation?” market, with its modest liquidity, may foreshadow shifts in broader AI-related markets, such as OpenAI’s next funding round or xAI’s valuation trajectory, given the interconnected nature of AI innovation.

The recent uptick in the “$80B - $61.5B” range suggests traders anticipate Anthropic leveraging its competitive edge—possibly its Claude models or safety-focused AI research—to command a premium. Conversely, a sustained “No funding round” probability might indicate market skepticism about Anthropic’s growth, offering a contrarian play for astute investors.

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