Equities and Bonds Rally Simultaneously

Risk appetite continues to strengthen, with the S&P 500 advancing 37 points to a session high of 3,748. Declining Treasury yields are fueling equity market gains while exerting downward pressure on the U.S. dollar, which has weakened to its lowest level of the day.

Broad market sentiment toward the global economy is improving, and trade war concerns are abating. Notably, White House advisor Peter Navarro has suggested that President Trump may consider reducing or eliminating tariffs on China, further supporting risk-on positioning.

Technical indicators on daily charts signal a bullish reversal, as buyers are stepping in to defend recent lows. While trade policy uncertainty remains a potential headwind, market participants are increasingly confident that sustaining equity market momentum is a key priority for the administration.

The most significant price action is in the Canadian dollar (CAD), which has retreated after testing a 20-year high and is now approaching key support near recent lows. This level may act as a strong technical floor, particularly as Trump has opted to delay, rather than cancel, tariff measures for 30 days. However, market sentiment could shift swiftly if unofficial reports suggest that trade negotiations are deteriorating, raising the risk of tariff reinstatement.

A.Naderi