CPI, trade deals, and OpEx
Trade deals sending markets soaring
Quick summary:
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Markets went up last week as Powell maintained a dovish tone and headlines on AI policy and trade deals, plus some social media posts from Trump, pushed SPX to a +1.5% intraday high before fading the move almost entirely.
SPX finished the week below 5,700, a level tested twice last week, only to be broken yesterday as SPX rallied 3.26% (to 5,844) on news that US and China have signed a trade deal reducing tariffs to 30% on Chinese goods and 10% on US goods, with a 90-day grace period.
Today’s CPI print was the main event and could set the tone into May OpEx on Friday; it came in line with expectations, +0.24% in April, and 2.8% annual. This means that tariffs didn’t have an overly adverse impact on prices yet.
The competition
With markets eyeing today’s CPI print and May OpEx just ahead, we’re entering a critical stretch that could shake things up fast. Let’s stay focused, keep the momentum going, and make the most of the opportunities this week!
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Last week’s performance
Markets pushed higher last week, even as the FOMC meeting played out exactly as expected. No rate cuts, no surprises — Powell stuck to his “wait and see” script, noting risks of both inflation and unemployment, but softening the tone during his presser. SPX flipped from -0.5% to +0.4%, and NASDAQ from -1% to +0.4%. That final push came after the repeal of the AI diffusion rule — a move heavily opposed by NVDA in the past — which sparked a sharp tech rally. The UK trade deal added fuel, and Trump’s “buy stocks” post sent SPX soaring to +1.5% on Thursday, before fading as news of Chinese tariffs dropping from 145% to 50% hit.
We’re still in the same regime: any hint of positive headlines — trade deals, AI policy reversals, tweets — triggers a move up. But those reactions are shorter now. The 5,700 level on SPX has been touched twice but remained unbroken until Monday, where over-the-weekend news of a trade deal between US and China sent markets rallying 3.2% to 4% on the day. SPX is now almost flat YTD after yesterday’s move.
This week kicks off with the aftermath of the weekend U.S.–China trade meetings and the much-anticipated CPI release on Tuesday. Inflation is still the primary focus. It came in line with expectations, +0.24%, and 2.8% Y-o-Y. A negative shock would have been a problem, but this basically means that tariffs haven’t had a destructive impact as feared. At least not in April.
Powell is scheduled to speak again Thursday, joined by several Fed officials, as political pressure around rate policy continues to grow.
Thursday also brings retail sales data — a key read on consumer behavior as tariffs begin to filter through. Consumer and small business sentiment surveys, housing starts, and manufacturing sector data are also due, all of which will help shape the broader macro picture. While earnings from Walmart, Cisco, Alibaba, and others will trickle in, the narrative still hinges on whether macro data can support a sustained push above 5,800.
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