Good morning. Markets surged on Thursday after the U.S. and U.K. announced a breakthrough trade agreement that some hope will serve as a blueprint for broader tariff de-escalation. In addition to today's deal, new reports suggest that U.S. officials are weighing a significant cut to China tariffs as soon as next week, further energizing investor sentiment. Stocks rallied across the board, with the Dow Jones Industrial Average rising more than 500 points and the Nasdaq 100 regaining its 200-day moving average for the first time since April.

While today’s U.K. trade deal is unlikely to move the needle economically, it has shifted the tone of global trade diplomacy. Meanwhile, with earnings season nearly complete and labor market data remaining steady, investor attention is now turning to global central banks and the trajectory of inflation.

Trump Strikes U.K. Trade Deal, Sending Signal to Allies and Rivals
The Economist reports that the new U.S.-U.K. trade agreement leaves a 10% tariff on British goods in place but slashes U.K. tariffs and opens key sectors like autos, aluminum, and aerospace for U.S. exports. While modest in size, the deal is geopolitically significant, signaling a willingness to negotiate and resetting the tone of U.S. trade diplomacy.
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China's Export Engine Still Running Despite Tariffs
WSJ reports that China's exports rose again in April, defying expectations of a slowdown due to sweeping U.S. tariffs. Robust shipments of electronics and industrial equipment suggest that Chinese manufacturers are adapting quickly, though import growth remains weak.
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Trump Floats 'Millionaire Surtax' in Tax Reform Package
WSJ details the administration’s proposed budget which includes a "millionaire surtax" raising the top marginal income tax rate while simultaneously lowering rates on middle-income households and small businesses. The White House says the policy is designed to boost growth and offset tariff revenue losses.
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Can the U.S. Economy Handle Tariff Shocks?
MarketWatch explores whether Wall Street is underestimating the economy’s ability to absorb the latest round of tariffs. Despite volatile headlines, analysts point to strong household balance sheets, resilient labor markets, and real wage gains as reasons the U.S. economy may stay afloat.
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Fed's Barr Says Tariffs Pose 'Dual Mandate' Challenge
CNBC covers Fed Vice Chair Michael Barr's remarks that tariffs are complicating the central bank’s balancing act, potentially increasing both inflation and unemployment. He emphasized the need to avoid mistaking short-term price shocks for entrenched inflation.
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U.S. and China to Meet for Weekend Trade Talks
Bloomberg reports that U.S. officials, including Treasury Secretary Bessent and Trade Rep Greer, will meet Chinese Vice Premier He Lifeng in Switzerland this weekend. The goal is to explore a tariff rollback framework, with officials hinting that U.S. levies on Chinese goods could be halved in the near term.
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U.S. equity markets finished sharply higher Thursday, led by strength in industrials, energy, and technology following news of a trade agreement between the U.S. and U.K. The Dow Jones gained more than 500 points, while the Nasdaq 100 reclaimed its 200-day moving average. The rally was also fueled by hopes that tariff talks with China could progress this weekend. Bond yields and the U.S. dollar surged, while gold retreated and crude oil rose more than 3%.

Thursday’s surge reflects a market increasingly eager for clarity on trade. The U.S.-U.K. agreement is modest but symbolic, and with China talks set for the weekend, bulls appear to be front-running de-escalation. Add in global rate cuts and a still-solid labor market, and risk appetite looks set to continue—at least until reality tests the narrative.