Closing Recap 

U.S. stocks surged on a “breakthrough” U.S./UK trade deal announcement, continuing their strong recovery from April lows; the dollar and Treasury yields jumped sharply, while gold plunged and oil prices rallied. 

Key Takeaways 

• Trade Deal Fuels Rally: Stocks climbed steadily after President Trump and UK PM Starmer announced a trade deal, with the U.S. maintaining a 10% tariff and the UK lowering its tariffs. 
• Broad Market Strength: Gains were widespread, with Industrials, Materials, Energy, and Technology leading, while only Healthcare lagged. Transports surged. 
• China Tariff Cut Speculation: A late-day NY Post report suggesting the U.S. might slash China tariffs to as low as 50% provided an additional boost. 
• Bank of England Cuts Rates: The BOE cut its main interest rate by 25bps, joining a growing list of global central banks easing policy, contrasting with the Fed’s hold. 
• Dollar & Yields Surge: The U.S. dollar climbed to 4-week highs, and Treasury yields jumped significantly across the curve on the positive trade news and growth optimism. 
• Gold Plummets: Gold prices fell sharply as safe-haven demand evaporated and the dollar rallied. 
• Oil Rallies: Crude oil prices gained over 3% on improved economic outlook stemming from trade deal hopes. 
• Bitcoin Hits $100K: Bitcoin surged above $100,000 for the first time since February. 

Market Overview 

U.S. equity markets experienced another day of strong gains, driven by significant positive developments on the trade front. The primary catalyst was the announcement of a “breakthrough deal” between the U.S. and the UK. President Trump and British Prime Minister Keir Starmer detailed an agreement where the U.S. will maintain its 10% tariff on UK goods, while Britain will lower its tariffs to 1.8% (from 5.1%) and increase access for U.S. goods. The deal also includes a $10 billion Boeing plane purchase by the UK and an aluminum/steel trading zone. This news provided a substantial boost to market sentiment, which has been steadily improving in recent weeks on hopes of trade de-escalation. Stocks have now recovered all of their steep April losses, with the Nasdaq 100 (QQQ) notably moving back above its 200-day moving average. 

Index	Up/Down	% Change	Last
DJ Industrials	254.6	0.0062	41368
S&P 500	32.67	0.0058	5663
Nasdaq	189.98	0.0107	17928
Russell 2000	36.76	0.0185	2026

The positive trade momentum was further amplified late in the day by a New York Post report suggesting the U.S. is considering a significant reduction in tariffs on Chinese goods, potentially to as low as 50% (from 145%), as soon as next week. While unconfirmed, this added to the risk-on mood. This comes ahead of a weekend meeting between U.S. and Chinese trade officials in Switzerland. Strength was broad-based across most sectors, with cyclical areas like Industrials, Materials, and Energy performing particularly well. The Dow Transports index surged over 2.9%. In central bank news, the Bank of England cut its key interest rate by 25 basis points, joining other global central banks in easing policy, a contrast to the Federal Reserve’s recent decision to hold rates steady.

Economic Data

Economic data released yesterday was mixed, with improving jobless claims but rising unit labor costs and softer wholesale activity, though trade news dominated market focus. 

• Weekly Jobless Claims: Fell to 228,000 from 241,000 prior, better than the 230,000 consensus. Continuing claims also decreased to 1.879 million. 
• Q1 Non-Farm Productivity/Unit Labor Costs: Productivity fell -0.8% (vs. -0.7% est.). Unit Labor Costs rose sharply by +5.7% (vs. +5.1% est.), indicating rising wage pressures. 
• Wholesale Inventories/Sales (Mar – Revised): Inventories revised to +0.4% (vs. +0.5% est.). Sales rose +0.6% (below +1.9% est.). The stock/sales ratio remained at 1.30 months. 
• NY Fed Inflation Expectations (Apr): Year-ahead expected inflation unchanged at 3.6%. Three-year-ahead expected inflation rose to 3.2% (highest since July 2022). Five-year-ahead expectations eased slightly to 2.7%. 

Commodities, Currencies, and Treasuries

Gold prices experienced a sharp sell-off, with June futures tumbling $85.90 to settle at $3,306.00 per ounce. The plunge was driven by a significant reduction in safe-haven demand as positive trade news spurred risk appetite, coupled with a strong rally in the U.S. dollar and rising Treasury yields. Crude oil prices surged, with WTI gaining $1.84 (+3.17%) to settle at $59.91/bbl. The rally was fueled by optimism that trade deals would boost global economic growth and energy demand. The U.S. dollar index (DXY) climbed to four-week highs, rallying strongly against the Japanese Yen (USD/JPY +1.35%) and modestly against the Euro, as the positive trade developments bolstered confidence in the U.S. outlook relative to other regions. Treasury yields jumped significantly across the curve, with the 10-year yield rising nearly 10 basis points to 4.373% and the 2-year yield also up sharply. Bitcoin surged over 3%, breaking above $100,000 for the first time since February.

Asset	Up/Down	Unit / % Change	Last
WTI Crude	1.84	USD/bbl	59.91
Brent	1.4	USD/bbl	62.52
Gold	-85.9	USD/oz	3306
EUR/USD	-0.0072	USD	1.1227
USD/JPY	1.88	JPY	145.7
10-Year Note	0.098	%	0.04373

Looking Ahead 

The market’s focus will remain intently on trade developments, particularly the U.S.-China talks scheduled in Switzerland this weekend and any follow-up to the NY Post report regarding potential deep cuts to China tariffs. The positive momentum from the U.S./UK deal will likely carry into next week, but concrete actions are needed to sustain the rally. Q1 earnings season is winding down, but remaining reports will still be monitored. Upcoming economic data will also be important, especially inflation figures, given the rising unit labor costs and Treasury yields.