Wall Street was undeniably bullish today, and President Trump had a lot to do with it.
Equities surged, with the Dow rising 1160.72 on the day.
As money was pulled into equities, bond yields also rose (reflecting a drop in bond prices). 10-Year Treasuries rose 10 basis points, and the 2-Year Treasuries rose 15bps.
Even forex markets were happy, with the dollar index rising a full point from market open.
There is little doubt but that President Trump was the catalyst for this burst of bullish enthusiasm.
The good news actually started yesterday, when Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer announced a “breakthrough” in trade talks with China.
When the details were released this morning, the breakthrough amounted to the US and China agreeing to a 90-day “pause” in the trade war.
CHINESE ACTIONS: China will remove the retaliatory tariffs it announced since April 4, 2025, and will also suspend or remove the non-tariff countermeasures taken against the United States since April 2, 2025.
China will also suspend its initial 34% tariff on the United States it announced on April 4, 2025 for 90 days, but will retain a 10% tariff during the period of the pause.
AMERICAN ACTIONS: The United States will remove the additional tariffs it imposed on China on April 8 and April 9, 2025, but will retain all duties imposed on China prior to April 2, 2025, including Section 301 tariffs, Section 232 tariffs, tariffs imposed in response to the fentanyl national emergency invoked pursuant to the International Emergency Economic Powers Act, and Most Favored Nation tariffs.
An even more promising tidbit was delivered later in the morning, at the President’s press briefing regarding his latest Executive Order on drug prices, when he claimed that China has agreed to drop its non-tariff trade barriers.
Whether they ultimately will or will not remains to be seen—China has danced this dance before and the trade barriers are still very much in place.
A more interesting bit of news came in that press briefing, when Donald Trump fixed the blame for America’s high drug costs on the behaviors of foreign countries forcing Big Pharma to charge artificially low prices for various drugs overseas, leading to equally artificial prices being charged here in the United States.
Our country has the highest drug prices anywhere in the world by sometimes a factor of five, six, seven, eight times. It's not like they're slightly higher, that six, seven, eight times. There are even cases of 10 times higher. So that you go 10 times more expensive for the same drug, that's big numbers.
Even though the United States is home to only 4% of the world's population, pharmaceutical companies make more than two-thirds of their profits in America. So think of that. With 4% of the population, the pharmaceutical companies make most of their money, most of their profits from America. That's not a good thing.
Big Pharma was explicitly let off the hook when it comes to drug prices.
Can the optimism be sustained? Possibly. The Bureau of Labor Statistics is set to release the April Consumer Price Index Summary tomorrow morning, and the Cleveland Federal Reserve’s InflationNow nowcast is projecting a further year on year drop in the inflation rate.
If President Trump’s tariff and trade strategies continue to not produce fresh bouts of inflation, Wall Street might decide to continue to feel rather bullish.
