A first trade deal has been made, what does it signal for the future? Looking at the S&P 500, we are currently above our 50-day moving average and appear to be approaching the 200-day moving average, indicating potential upward momentum.

The U.S. and U.K. have unveiled a framework for a trade deal. While it’s encouraging that we’ve reached an agreement with the U.K., one of our closest allies, it’s worth noting that we already maintain a trade surplus with them. Despite this, the tariff rate remains at 10%, which may represent the best-case scenario, or the “floor”, for future trade agreements. Countries with whom we run trade deficits are unlikely to secure terms as favorable.

Meanwhile, the administration has begun promoting a framework for a deal with China, which has been met with little enthusiasm. A return to pre-tariff economic conditions seems unlikely, but it remains unclear whether the market fully grasps this reality.