Closing Recap 

 U.S. stock futures surged dramatically higher overnight following reports of a significant breakthrough and temporary truce in the U.S.-China trade dispute; oil prices jumped, gold plunged, the dollar rallied strongly, and Treasury yields climbed on the positive news. 

Key Takeaways 

• Trade Truce Sparks Massive Rally: Futures soared (S&P +3%, Nasdaq +3.9%) after U.S. and Chinese officials announced a 90-day pause in tariff escalation following weekend talks in Switzerland. 
• Tariff Details Emerge: During the 90-day pause, the U.S. will reportedly lower tariffs to 30% (from 145%), and China will cut its tariffs to 10% (from 84%). 
• Risk-On Sentiment Dominates: The CBOE Volatility Index (VIX) tumbled below 20, signaling a sharp reduction in market fear. 
• Oil Rallies, Gold Plummets: Crude oil prices jumped over 3% on improved global growth prospects, while gold plunged over 3% as safe-haven demand evaporated. 
• Dollar Surges, Yields Rise: The U.S. dollar rallied strongly, particularly against the Yen, and Treasury yields climbed as investors moved out of perceived safety assets. 
• Trump Targets Drug Prices: President Trump signaled potential action to cut prescription drug prices via executive order, pressuring pharmaceutical stocks pre-market. 
• Focus Shifts to Inflation Data: With a temporary trade truce, market attention now turns back to key economic data, including PPI and CPI reports later this week. 
• Global Markets Rally: Asian and European stock markets posted strong gains on the trade news. 

Market Overview 

A significant wave of optimism swept through global markets overnight, sending U.S. stock futures soaring, following positive conclusions to high-stakes trade talks between the U.S. and China held over the weekend in Switzerland. Both sides reported “substantial progress” and “important consensus,” culminating in an agreement for a 90-day pause in tariff escalations. Details emerging this morning indicate a significant, albeit temporary, rollback: the U.S. will reportedly lower its punishing tariffs on China to 30% during this period, while China will reduce its retaliatory tariffs to 10%. U.S. Treasury Secretary Bessent hailed the progress, and officials from both nations agreed to establish a new economic dialogue forum. 

Index (Futures)	Up/Down	% Change	Last
Dow	979	0.0237	42302
S&P 500	171.25	0.0301	5849
Nasdaq	792.5	0.0393	20929

This breakthrough provides substantial relief to markets that have been whipsawed by escalating trade tensions and tariff threats for weeks. The reaction was immediate and powerful: S&P 500 futures jumped over 3%, the Nasdaq surged nearly 4%, and the VIX (fear gauge) plunged below 20. Risk assets rallied broadly, with oil prices climbing sharply on hopes that averting a deeper trade war will support global economic growth and energy demand. Conversely, safe-haven assets tumbled, with gold experiencing a steep sell-off and Treasury yields rising as investors shed defensive positions. The U.S. dollar also rallied strongly. 

While the trade truce dominates headlines, other factors are at play. President Trump targeted the pharmaceutical industry over the weekend, threatening executive action to lower drug prices, which weighed on related stocks in pre-market trading. Furthermore, weak inflation data out of China overnight (both CPI and PPI falling) highlighted ongoing global economic crosscurrents. With the immediate tariff threat paused, investor focus is expected to shift back towards fundamental economic data, particularly the upcoming U.S. inflation reports (PPI and CPI), and ongoing Q1 earnings reports.

Economic Calendar

Today’s U.S. economic calendar is relatively light, focusing on agricultural reports and the federal budget.

• China Inflation (Apr – Reported Overnight): Factory-gate prices (PPI) fell -2.7% y/y (steeper than March’s -2.5%, but better than -2.8% est.). Consumer prices (CPI) fell -0.1% y/y (matching March and est.).
• 12:00 PM ET: WASDE May crop report
• 2:00 PM ET: Federal Budget for April
• Barclays Emerging Payments and FinTech Forum (New York).
• Needham Technology, Media, & Consumer Conference (New York).

Commodities, Currencies, and Treasuries 

Commodity markets reacted strongly to the trade truce news. Crude oil surged, with WTI jumping over 3% to near $62.88/bbl, driven by expectations of improved global demand if trade tensions ease. Conversely, gold prices plunged, falling over $125 (-3%+) to below $3,220/oz as safe-haven appeal diminished rapidly. The U.S. dollar index rallied significantly, gaining ground broadly against major counterparts, particularly the Japanese Yen (USD/JPY surged over 3 JPY). The improved U.S. outlook and potential easing of global uncertainty boosted the greenback. Treasury yields climbed across the curve, with the 10-year yield rising over 7 basis points towards 4.45%, reflecting the shift away from safe-haven bonds and towards riskier assets.

Asset	Up/Down	Unit / % Change	Last
WTI Crude	1.86	USD/bbl	62.88
Brent	1.82	USD/bbl	65.73
Gold	-125	USD/oz	3219
EUR/USD	-0.0158	USD	1.1089
USD/JPY	3	JPY	148.35
10-Year Note	0.074	%	0.04449

Looking Ahead 

The market will digest the details and implications of the U.S.-China trade truce. While providing significant short-term relief, the 90-day duration means underlying tensions persist. Focus will now pivot sharply to upcoming U.S. inflation data (PPI tomorrow, CPI later this week) to gauge price pressures independent of the recent tariff spikes. Economic data releases and ongoing corporate earnings reports will also regain importance in assessing the economy’s underlying health. Comments from officials regarding the next steps in trade negotiations will continue to be monitored closely.