Still Selective As Trade Conflict Cools

Summary

• We still see tariffs causing further contractions in quarterly activity but the cumulative impact may be more limited. We eye opportunities from mega forces.
• U.S. stocks ticked down last week after a tech-driven rally over easing restrictions on AI chip exports. UK stocks rose on news of a U.S.-UK trade deal.
• We’re looking for early signs of tariffs pushing up inflation in U.S. CPI data out this week. Sticky inflation will limit how far the Federal Reserve can cut rates.

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The U.S.-China deal represents a major de-escalation in the trade conflict. Three key takeaways? First, it reaffirms that the hard economic rules we’ve been flagging will shape policy. Second, tariffs will likely bring more supply-driven contractions in quarterly activity, but the cumulative impact on