Next week, the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation are expected to unveil a joint rulemaking to modernize bank capital requirements. The proposal would revise elements of the Basel III framework and adjust capital surcharges for the largest US lenders. Regulators say the changes aim to better align capital buffers with actual risk and support lending. The measures would be subject to public consultation before any final rule is adopted.

Private credit funds are facing new challenges as banks, led by JPMorgan Chase, curb back leverage lending. JPMorgan's recent decision to revalue private credit assets and reduce lending has put the industry on alert, as back leverage has been crucial in boosting returns. Moody's Ratings and the Office of Financial Research estimate that private credit fund borrowing ranges from $300 billion to $345 billion. A pullback in back leverage could further strain the industry, which is already dealing with investor redemptions and rising defaults.

Hedge funds are increasingly divided by positions on AI, with firms profiting from semiconductor and hardware stocks while others exposed to software companies suffer losses. The shift has produced sharp stock dispersion, helping some managers generate large gains while pushing at least one software-focused fund to shut down.

Investors are increasingly turning to defined-outcome "buffer" ETFs as alternatives to bonds after Treasurys failed to consistently offset stock market losses. The $80 billion category, which uses options to cap downside in exchange for limited gains, has drawn inflows during the Iran conflict as investors seek more predictable portfolio protection.

The Commodity Futures Trading Commission released guidance on prediction markets and is seeking public comment ahead of proposing a rule on how such platforms, including Kalshi and Polymarket, should operate. The CFTC is highlighting the need for safeguards against market manipulation and which types of contracts -- such as those regarding assassination or war -- should be banned because they run counter to public interest.

The Senate has approved a sweeping housing bill that would restrict large investors from buying single-family homes and expand federal support for affordable housing. The measure, which now moves to the House, reflects growing bipartisan concern over investor activity in tight housing markets. The bill also includes incentives for new construction and first-time buyers as lawmakers seek to address persistent housing shortages.

The Federal Reserve is widely expected to keep interest rates unchanged at its upcoming meeting as the Iran conflict drives oil prices higher and clouds the inflation outlook. Economists say policymakers are likely to wait for clearer signals on inflation and the labor market before considering any rate cuts.