For stocks, it was more momentum and new record highs for the S&P 500. A combination of easing geopolitical tensions and a growing expectation that the Fed will begin launching into rate cuts soon has investors in a bullish mood. While the global temperature being taken down a bit is a good thing, there are still some things to be concerned about on a trend basis.
The agreement between the U.S. and China on rare earth metals is one of the few actual deals that Trump has been able to pull off, but the announcement that he’s cutting off trade negotiations with Canada shows that tariff risk doesn’t seem like it’ll be going away anytime soon. Whether that turns into anything more by Trump's stated July 9th deadline remains to be seen, but his history of threatening and withdrawing tariffs probably means that this shouldn’t be considered a market moving event.
The Fed could. The market’s been waiting for a resumption of the rate cutting cycle and it looks like it’s most likely to begin in September. If you pay attention to the futures market, traders are pricing in a roughly 50% chance of three rate cuts by year-end. This past week, even Powell himself seemed to take a more dovish tone on things by suggesting that the Fed may have begun cutting already had it not been for some pesky inflation numbers.
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