Good morning. Markets are kicking off the week digesting a surprise announcement from U.S. and Chinese trade officials: a 90-day mutual tariff pause and framework agreement to reduce key levies by up to 115 percentage points. The move, struck over the weekend in Switzerland, marks the most concrete sign yet of de-escalation in the trade standoff that’s dominated investor sentiment for weeks.

While questions remain about implementation and follow-through, global markets have responded positively, and U.S. futures are pointing to a higher open. With earnings season largely in the rearview and a relatively quiet data calendar this week, investor focus will remain squarely on how markets interpret and price this evolving trade détente.

Surprise U.S.-China Tariff Deal Buoys Markets
WSJ reports that over the weekend, U.S. and Chinese trade officials agreed in principle to reduce reciprocal tariffs. The agreement includes lowering the U.S. tariff rate on most Chinese imports to 80%, while China pledged increased purchases of U.S. energy and agricultural goods. The news has sparked relief across global markets and is viewed as a potential turning point for strained trade relations.
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Trump's Tariff Plan Shifts Spotlight to Oil Industry
The Economist explores how President Trump’s aggressive trade posture has complicated operations for U.S. energy producers. Despite rising global oil prices, American firms face regulatory pressure and tariff-related supply chain hurdles. Industry leaders are calling for clearer policies to prevent long-term investment disruption.
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Bessent Breaks Down U.S.-China Tariff Framework
MarketWatch recaps U.S. Treasury Secretary Scott Bessent’s explanation of how the 115-point reduction in tariffs aims to rebalance trade without giving away too much leverage. The new structure will emphasize sectoral flexibility, favoring U.S. technology and energy exports.
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U.S. House Republicans Eye Medicaid Cuts
WSJ details a proposal by House Republicans to reduce Medicaid outlays as part of the 2026 budget, citing deficit concerns. The plan faces steep opposition in the Senate and is unlikely to pass without bipartisan support.
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JPMorgan Warns of U.S. Lag Behind European Equities
MarketWatch highlights a JPMorgan research note suggesting the U.S. stock market may underperform European peers in the coming quarters, citing stretched valuations and political uncertainty in the U.S.
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"Buy America" Sentiment Rises After Trade Progress
Bloomberg reports a surge in U.S.-centric investment flows following trade progress with the U.K. and China. Asset managers note renewed appetite for domestically focused equities, especially in infrastructure and manufacturing.
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U.S. equity markets finished modestly lower on Friday, capping off a quiet session marked by light volume and narrow trading ranges. The S&P 500, Dow, and Nasdaq each ended the day with slight declines, while energy and real estate sectors outperformed. Treasury yields ticked higher as markets recalibrated expectations around Fed policy, and WTI oil broke back above $60 per barrel on easing trade tension headlines. For the week, the S&P 500 declined 0.5%, the Dow fell 0.2%, and the Nasdaq slipped 0.3%.

With earnings season nearly complete and policy uncertainty beginning to ease, investor focus is shifting toward the next phase of trade negotiations. While markets are optimistic, follow-through on tariff reductions will be crucial. In the meantime, asset allocators are watching for signs of relative strength across sectors and regions, as valuation gaps and geopolitical risks come into sharper view.