The US may be considering exempting child-related goods from its planned 145% tariffs. The Shanghai index rallied +0.28%, the Hang Seng gained +0.37%, and the Nikkei 225 added +0.41%. News of a U.S./UK trade deal made headlines last evening. In a divided decision, the BoE cut rates by 25 bps as expected, to 4.25%. The DAX jumped +1.02%, the Stoxx 600 added +0.40% and the FTSE 100 dipped -0.32%. 10-year Bunds yield 2.542%. For the week of 5/3, Initial Jobless Claims ticked downwards from 241K to 228K, below 232K est. Q1 Nonfarm Productivity (annualized) declined from +1.5% to -0.8%, vs. -0.5% est., and Unit Labor Costs grew from +2.0% to +5.7%, vs. +5.2% est. March Wholesale Inventories went from +0.3% to +0.4% vs. +0.5% est. For the week of 5/7 the Fed Balance Sheet came in at $6.709T. Today’s $25B 30-Yr T-Bond auction had poor results. 10-Yr T-Note yields were up to 4.391%. The June US$ index jumped +1.08% to 100.520 (90-day correlation with the ES is +0.81). June crude oil spiked +3.3% to $60.02. June gold sank -2.6% to $3,312.20. Bitcoin surged +4.9% to $101,541. The U.S./China are scheduled to begin trade negotiations this weekend. Pres. Trump is reportedly also going to rescind existing Biden-era AI and semiconductor export restrictions to various countries. Stocks surged early and remained elevated, but the ES closed 50 pts. off highs.

China’s central bank cut key rates and injected 1 trillion yuan to stimulate the economy. The Shanghai index rallied +0.80%, the Hang Seng gained +0.13%, and the Nikkei 225 dipped -0.14%. The DAX retreated -0.58%, the Stoxx 600 pulled back -0.54% and the FTSE 100 fell -0.44%. 10-year Bunds yield 2.476%. For the week of 5/2, MBA Mtge Apps Composite Index improved from -4.2% prior to +11.0%, with the Purchase and Refinance Index gaining to +11.1%. The EIA Petroleum Status Report showed Crude Oil inventories going from -2.7M bbls to -2.0M bbls, with Gasoline growing from -4.0M bbls to +0.2M bbls. March Consumer Credit went from $-0.8B to $+10.0B. The Fed kept the Fed Funds Rate target at 4.25% to 4.50% (see Looking Ahead). 10-Yr T-Note yields finished at 4.282%. The June US$ index retreated -0.63% to 99.015. June crude oil lost -1.81% to $58.03. June gold finally pulled back, losing -1.22% to $3,382.00. After U.S. stock markets closed yesterday afternoon, it was reported that Treas Sec. Bessent was going to meet with China to begin trade talks. U.S. stock index futures immediately spiked and remained positive after-hours and gapped open higher this morning. Early in the session prices sank and went negative, but soon went back to earlier highs. After the Fed announcement there were no major fireworks and the ES closed stronger.

The Shanghai index rallied +1.13%, the Hang Seng gained a solid +0.70%, and the Nikkei 225 gained +1.04%. German chancellor Merz initially failed to win a majority vote from lawmakers, but did succeed on the second vote and will now be officially sworn in. The DAX retreated -0.40%, the Stoxx 600 faded -0.18% and the FTSE 100 eked out at +0.1% gain. 10-year Bunds yield 2.544%. The March International Trade in Goods and Services came in at a record deficit of $-140.5B, worsening from a prior number of $-123.2B, and coming in below consensus of $136.3B. Today’s $42B 10-Yr T-Note auction found sound demand, and yields finished at 4.310%. The June US$ index retreated -0.63% to 99.015. June crude oil recovered +3.45% to $59.10 (it’s down -26.5% from its recent peak in Jan., near a 4-year low). June gold surged to another record high, gaining +3.3% to $3,431.00 (higher by +23.8% in the last 3 mos., with a 90-day inverse correlation to the US$ of -0.95%). Bitcoin added +0.60% to $94,958. After-hours, U.S. stock index futures pulled back and on the opening bell prices firmly red. Early on, Treas Sec. Bessent said trade deals with 17 partners are imminent, with China not yet involved (see Looking Ahead). The ES then jumped and recovered to unchanged, but those gains faded and by the close indexes were firmly negative.