Good morning. Markets bounced sharply Tuesday as investors responded positively to signs of easing trade tensions and a wave of better-than-feared earnings. The Dow and S&P 500 snapped four-day losing streaks, while bond yields edged lower and the dollar regained some footing after recent weakness. Comments from Treasury Secretary Bessent describing the U.S.-China trade standoff as "unsustainable" helped fuel the rally, though he warned any resolution would take time.

Meanwhile, President Trump stepped back from recent threats to remove Fed Chair Jerome Powell, signaling a less combative tone toward the central bank after days of market concern over Fed independence. With earnings season accelerating and preliminary PMI data due out today, investors will be watching for fresh signals on the health of the economy.

Trump Signals Softer Tone on Powell
President Trump said he has no intention of firing Federal Reserve Chair Jerome Powell, easing concerns over Fed independence after recent criticism.
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Foreign Investors Selling Treasurys at Accelerating Pace
MarketWatch reports that overseas demand for U.S. debt has weakened, which could push yields higher and raise borrowing costs for U.S. consumers and businesses.
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Trump Promises to Be “Very Nice” to China in Trade Talks
Bloomberg highlights President Trump’s comment that trade talks with China are progressing and that he intends to take a more conciliatory approach.
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America Faces Headwinds in LNG Diplomacy
The Economist explores how the U.S. push to expand LNG exports faces resistance abroad, especially as global buyers grow wary of geopolitical risks.
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Stocks closed higher on Tuesday, with the S&P 500 gaining 1.2% and the Dow Jones Industrial Average rising nearly 500 points. Financials, consumer discretionary, and tech led the advance, as risk sentiment improved on headlines that the U.S. may be nearing progress on multiple trade fronts. Treasury yields were mixed, with the 10-year falling to 4.40% and the 2-year edging higher to 3.81%. Gold gave back some recent gains, while oil extended its rebound amid new U.S. sanctions on Iranian crude exports.

Corporate earnings remain a focal point. Tesla reports after the close, with Alphabet, Microsoft, and Amazon set to report later in the week. Thus far, 76% of S&P 500 companies have beaten estimates with an average upside surprise of 6.2%, though concerns about tariff-related margin pressure persist. In economic data, the Richmond Fed manufacturing index slipped deeper into contraction.

Markets got a reprieve yesterday, but caution remains the dominant sentiment. While earnings are largely exceeding expectations, guidance and commentary on tariffs will remain key. Signs of progress on trade could ease pressure on the Fed, though we believe Powell's wait-and-see stance is likely to persist. With inflation moderating and growth slowing, the next few weeks will be critical in shaping the policy and market outlook.