From Yahoo Finance: 2025-05-12 17:10:00

Relief and optimism surge in global markets as U.S.-China tariff talks ease fears of a trade crisis. Wall Street soars, with the Dow up 2.8%, S&P 500 up 3.3%, and Nasdaq up 4.4%. U.S. Treasury yields rise, gold drops 3%, and the dollar index leaps 1.4%. Tariff truce seen as a “game-changer” for market sentiment.

The U.S. and China reach a deal to slash tariffs, calming fears of an economic slump. Investors cautiously cheer the U.S.-China tariff truce. The unexpected agreement defuses trade tensions and boosts global markets. Geopolitical tensions also cool, with positive developments in various conflicts worldwide. Ceasefires and diplomatic talks contribute to investor optimism.

Federal Reserve takes a cautious stance amid global trade war uncertainty. Fed leaves interest rates unchanged, diverging from other central banks cutting rates. Powell emphasizes patience, citing strong U.S. economy. Powell’s approach faces criticism for being reactive and potentially leaving Fed behind the curve. Uncertainty looms over Fed’s future moves.

Fed’s stance influenced by U.S. inflation expectations and impact of trade war. U.S. inflation expected to rise due to tariffs, affecting consumer prices. Uncertainty persists even with trade agreements, as U.S. tariffs remain high. Potential inflationary effects of trade war escalation on U.S. and global economies. Fed’s cautious approach explained by inflation concerns.

“The Fed suffers from excessive unanimity disease,” says former BOE rate-setter. Central banks criticized for gradualist approach to rate changes. Fed faces uncertainty amid Trump’s trade war, impacting policy decisions. Market remains optimistic amid positive trade news, overlooking Fed’s cautious stance. Trade war developments may shape Fed’s future actions.



Read more at Yahoo Finance: Tariff truce a market ‘game changer’