Closing Recap 

U.S. stocks surged to two-month highs, with the S&P 500 and Nasdaq posting strong gains, as a significant U.S.-China agreement to temporarily slash tariffs ignited a powerful risk-on rally; the dollar and oil climbed, while gold plunged and Treasury yields rose. 

Key Takeaways 

• Massive Rally on Trade Truce: Equities soared (S&P +3.3%, Nasdaq +4.3%) after the U.S. and China agreed to a 90-day tariff reduction, significantly easing trade war fears. 
• Tariff Details: U.S. to cut China tariffs from 145% to 30%; China to cut U.S. tariffs from 125% to 10% for three months. VIX Plunges: Market fear evaporated, with the CBOE Volatility Index (VIX) falling over 16% to below 20 for the first time since late March. 
• Risk-On Dominates: Broad gains across stocks and commodities (oil), while safe-haven gold plummeted. 
• Fed Rate Cut Bets Trimmed: Following the positive trade news, markets pushed back expectations for Fed rate cuts, now seeing the first cut no earlier than September and fewer cuts overall this year. 
• Dollar Surges, Yields Rise: The U.S. dollar rallied strongly, particularly against the Yen and Euro, and Treasury yields climbed as investors shed defensive positions. 
• Trump Optimistic on Further Deal: President Trump expressed optimism that a more permanent deal with China will be reached, avoiding a return to high tariffs. 

Market Overview 

Wall Street experienced a powerful surge today, with major stock indices reaching their highest levels in two months. The catalyst for the explosive rally was a significant breakthrough in U.S.-China trade relations announced over the weekend. Following two days of high-level talks in Switzerland, U.S. Treasury Secretary Bessent and U.S. Trade Representative Jamieson Greer, along with their Chinese counterparts, revealed an agreement to temporarily and substantially reduce the punishing tariffs each country had imposed on the other. For the next 90 days, the U.S. will slash its extra tariffs on Chinese imports from 145% down to 30%, while China will reduce its duties on U.S. goods from 125% to 10%.

Index	Up/Down	% Change	Last
DJ Industrials	1160.72	0.0281	42410
S&P 500	184.28	0.0326	5844
Nasdaq	779.43	0.0435	18703
Russell 2000	69.12	0.0342	2092

This news was greeted with immense relief by global markets, effectively tapping the brakes on a trade war that had severely rattled investor confidence and threatened global economic growth. President Trump hailed the agreement as a vindication of his aggressive tariff strategy and expressed optimism that a more permanent deal could be reached, preventing tariffs from returning to their recent extreme levels. The market reaction was a classic risk-on stampede. The CBOE Volatility Index (VIX) plunged over 16%, falling below the key 20 level, indicating a sharp decline in perceived market risk. Investors aggressively bought equities and commodities like oil, while simultaneously dumping safe-haven assets such as gold and U.S. Treasuries. The U.S. dollar also rallied strongly. In a notable shift, market expectations for Federal Reserve rate cuts were significantly pared back, with the timeline for an initial cut pushed out and the total number of anticipated cuts for the year reduced.

Economic Data

Yesterday’s main economic data point was the U.S. federal budget surplus for April, driven by strong tax receipts and tariff collections. 

• Federal Budget (Apr): The U.S. government posted a $258 billion budget surplus, up 23% year-over-year, reflecting robust tax collections and surging import duty revenues. 

Commodities, Currencies, and Treasuries 

Gold prices plummeted, with June futures falling $116 (-3.46%) to settle at $3,228.00 per ounce. The sharp decline was a direct result of evaporating safe-haven demand as the U.S.-China trade truce significantly reduced immediate geopolitical and economic risks, coupled with a surging U.S. dollar. Crude oil prices rallied, with WTI gaining $0.93 (+1.52%) to settle at $61.95/bbl, reaching a two-week high. The improved outlook for global economic growth and oil demand stemming from the trade de-escalation fueled the gains, outweighing earlier concerns about OPEC+ supply. Saudi Aramco also expressed optimism about resilient oil demand.

Asset	Up/Down	Unit / % Change	Last
WTI Crude	0.93	USD/bbl	61.95
Brent	1.05	USD/bbl	64.96
Gold	-116	USD/oz	3228
EUR/USD	-0.0171	USD	1.1076
USD/JPY	3.2	JPY	148.56
10-Year Note	0.074	%	0.04449

The U.S. dollar index (DXY) surged, climbing over 1.6% to above 101.90, marking a significant rebound from recent multi-year lows. The dollar gained sharply against the Euro (EUR/USD -1.5%) and even more dramatically against the Japanese Yen (USD/JPY +3.20%). Treasury yields rose across the curve as investors rotated out of safe-haven bonds and repriced Fed expectations; the 10-year yield climbed over 7 basis points to 4.449%. Bitcoin prices pulled back from recent highs.

Looking Ahead 

The market will now focus on the durability of the U.S.-China trade truce and the progress of negotiations during the 90-day tariff pause. Any signs of renewed friction or, conversely, further positive steps towards a comprehensive deal will be key market drivers. With the immediate tariff cloud lifted somewhat, attention will also turn more squarely to upcoming economic data (PPI, CPI this week) for insights into inflation and growth, which will in turn influence Fed policy expectations. Q1 earnings season continues, though with less intensity than previous weeks.