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A review of the week's top global economic and capital markets news.
For the week ending 9 May 2025
As of midday Friday, global equities were modestly firmer on the week amid signs of a thaw in the U.S.-China trading relationship. The yield on the U.S. 10-year note firmed 9 basis points from a week ago to 4.36% while the price of a barrel of West Texas Intermediate crude oil rose US$2 to US$60.50. Volatility, as measured by the futures contracts on the Cboe Volatility Index (VIX), fell to 22.1 from 23.0.
MACRO NEWS
U.S., U.K. reach first Trump 2.0 trade deal
On Thursday, the United States and Great Britain reached agreement on the framework for a new trade deal. The agreement keeps in place the 10% baseline levy with some exceptions while reducing the sectoral tariffs on the first 100,000 autos the U.K. exports to the U.S. annually. It also exempts British steel and aluminum from those levies. The U.K. agreed to import more U.S. goods, including 10 billion dollars’ worth of Boeing jets. The deal clears the way for increased U.S. exports of farm products by lowering nontariff barriers. Prime Minister Keir Starmer said that the U.K. had been promised preferential treatment if U.S. tariffs are imposed on the import of pharmaceuticals, a move that is expected in the coming weeks. Thursday’s agreement suggests that neither the 10% baseline nor the 25% sectoral tariffs will be easily negotiated away as talks with other countries proceed.
U.S. and China to hold talks in Switzerland
U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer will meet in Switzerland this weekend with Chinese Vice Premier He Lifeng to discuss trade. The Wall Street Journal reported that Chinese outreach to the U.S. over controlling the flow of fentanyl precursors jump-started the rapprochement. Bessent warned that the meeting is more about deescalation than reaching a major trade agreement. Trump said Thursday that the 145% tariff rate against China can’t go higher and “we know it’s going down.” The president added that, with progress being made on trade and Congress working on a tax bill, “you better go out and buy stock now.” On Friday morning, Trump said an 80% tariff on China “seems right,” though the number would be up to Bessent. Media reports suggest the U.S. is considering cuts to between 50% and 54%.
Fed: Uncertainty high but economy solid
As expected, the U.S. Federal Reserve held rates steady in a range of between 4.25% and 4.50% on Wednesday. In its statement, the Federal Open Market Committee said it believes the risks of higher unemployment and higher inflation have risen. Against a highly uncertain backdrop, Fed Chair Jerome Powell said that the central bank is well-positioned to wait for greater clarity and that it is appropriate for policymakers to remain patient.
QUICK HITS
EARNING NEWS
With about 90% of the constituents of the S&P 500 Index having reported for Q1 2025, blended earnings per share (which combines reported data with estimates for those that have yet to report) show that earnings rose around 13.6% compared with the same quarter a year ago, according to data from FactSet. Blended sales rose 4.8% year over year.
Past performance is no guarantee of future results.
Sources: MFS research, Wall Street Journal, Financial Times, Reuters, Bloomberg News, FactSet Research, CNBC.com.
This commentary was first published in the United States by MFS and is distributed in Canada by SLGI Asset Management Inc., with permission.
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